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Value through performance

Annual Report 2014

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Our Charter

We are BHP Billiton, a leading global resources company.

Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.

Our Values Sustainability

Putting health and safety first, being environmentally responsible and supporting our communities.

Integrity

Doing what is right and doing what we say we will do.

Respect

Embracing openness, trust, teamwork, diversity and relationships that are mutually beneficial.

Performance

Achieving superior business results by stretching our capabilities.

Simplicity

Focusing our efforts on the things that matter most.

Accountability

Defining and accepting responsibility and delivering on our commitments.

We are successful when:

Our people start each day with a sense of purpose and end the day with a sense of accomplishment. Our communities, customers and suppliers value their relationships with us.

Our asset portfolio is world-class and sustainably developed.

Our operational discipline and financial strength enables our future growth. Our shareholders receive a superior return on their investment.


Andrew Mackenzie

Chief Executive Officer


BHP Billiton Limited. ABN 49 004 028 077. Registered in Australia. Registered office: 171 Collins Street, Melbourne, Victoria 3000, Australia. BHP Billiton Plc. Registration number 3196209. Registered in England and Wales. Registered office: Neathouse Place, London SW1V 1LH, United Kingdom. Each of BHP Billiton Limited and BHP Billiton Plc are members of the BHP Billiton Group, which is headquartered in Australia. BHP Billiton is a Dual Listed Company comprising BHP Billiton Limited and BHP Billiton Plc. The two entities continue to exist as separate companies but operate as a combined Group known as BHP Billiton.

The headquarters of BHP Billiton Limited and the global headquarters of the combined BHP Billiton Group are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. Both companies have identical Boards of Directors and are run by a unified management team. Throughout this publication, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole.

Throughout this Annual Report, the terms BHP Billiton, the Company and the Group refer to the combined group, including both BHP Billiton Limited and subsidiary companies and BHP Billiton Plc and subsidiary companies.

1

Strategic Report

2

our assets

1 Strategic Report 2

1.1

our Company

2

1.9

our approach to remuneration

27

1.2

BHP Billiton locations

6

1.10

Key performance indicators

28

1.3

Chairman’s review

8

1.11

Summary of consolidated performance

30

1.4

Chief executive officer’s report

9

1.12

our Businesses

33

1.5

our strategy and business model

10

1.13

our people

46

1.6

Strategic priorities

14

1.14

Sustainability

49

1.7

our management of risk

20

1.15

additional information

57

1.8

our approach to corporate governance

26




2 Our assets




69

2.1 Business overview

69


2.1.5 aluminium, Manganese and nickel Business

92

2.1.1 Petroleum and Potash Business

69


2.1.6 Marketing

99

2.1.2 Copper Business

78

2.2

Production

100

2.1.3 iron ore Business

82

2.3

reserves and resources

104

2.1.4 Coal Business

87

2.4

Major projects

133



2.5

Business performance

135

3 Corporate Governance Statement 141

3.1

Governance at BHP Billiton

142

3.13

Director re-election

160

3.2

Board of Directors and Group Management Committee

144

3.14

Board committees

161

3.3

Shareholder engagement

150

3.15

risk management governance structure

171

3.4

role and responsibilities of the Board

151

3.16

Management

172

3.5

Board membership

152

3.17

Business conduct

173

3.6

Chairman

152

3.18

Diversity and inclusion at BHP Billiton

173

3.7

Senior independent Director

153

3.19

Market disclosure

173

3.8

Director skills, experience and attributes

153

3.20

remuneration

174

3.9

Director induction, training and development

156

3.21

Directors’ share ownership

174

3.10

independence

157

3.22

Company secretaries

174

3.11

Board evaluation

158

3.23

Conformance with corporate governance standards

174

3.12

Board meetings and attendance

160

3.24

additional uK disclosure

175

4 Remuneration Report


176

4.1 annual statement by the remuneration

4.3 remuneration policy report

179

Committee Chairman

177 4.4 annual report on remuneration

186

Contents



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3 Corporate Governance Statement

4.2 introduction to the remuneration report 178

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4

Remuneration Report

  1. Directors’ Report 209

    5.1

    review of operations, principal activities and


    5.11

    auditors

    213


    state of affairs

    210

    5.12

    non-audit services

    214

    5.2

    Share capital and buy-back programs

    211

    5.13

    Political donations

    214

    5.3

    results, financial instruments and going concern

    212

    5.14

    exploration, research and development

    214

    5.4

    Directors

    212

    5.15

    Class order

    214

    5.5

    remuneration and share interests

    212

    5.16

    Proceedings on behalf of BHP Billiton limited

    214

    5.6

    Secretaries

    212

    5.17

    Directors’ shareholdings

    214

    5.7

    indemnities and insurance

    213

    5.18

    GMC members’ shareholdings (other than Directors)

    214

    5.8

    employee policies

    213

    5.19

    Performance in relation to environmental regulation

    215

    5.9

    Corporate governance

    213

    5.20

    Share capital, restrictions on transfer of shares and


    5.10

    Dividends

    213


    other additional information

    215

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  2. Legal proceedings 216

    5

    Directors’ Report

  3. Financial Statements 217

    7.1

    Consolidated Financial Statements

    218

    7.5 lead auditor’s independence Declaration under


    7.2

    BHP Billiton Plc

    302

    Section 307C of the australian Corporations act 2001

    309

    7.3

    Directors’ declaration

    307

    7.6 independent auditors’ reports

    310

    7.4

    Statement of Directors’ responsibilities in respect


    7.7 Supplementary oil and gas information – unaudited

    314


    of the annual report and the Financial Statements

    308



    8 Glossary



    320

    8.1 Mining, oil and gas-related terms

    320

    8.3 terms used in reserves and resources

    325

    8.2 non-mining, oil and gas terms

    322

    8.4 units of measure

    325

    9 Shareholder information



    326

    9.1

    History and development

    326

    9.7

    Dividends

    334

    9.2

    Markets

    326

    9.8

    Share price information

    335

    9.3

    organisational structure

    326

    9.9

    american Depositary receipts fees and charges

    337

    9.4

    Material contracts

    327

    9.10

    taxation

    337

    9.5

    Constitution

    328

    9.11

    Government regulations

    342

    9.6

    Share ownership

    331

    9.12

    ancillary information for our shareholders

    344

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    1 Strategic Report

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    1.1 Our Company


        1. Group overview

          We are BHP Billiton, a leading global resources company. We are among the world’s top producers of major commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.


          our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. our portfolio of high-quality growth opportunities positions BHP Billiton to continue to meet the changing needs of our customers and the resource demands of emerging and developed economies at every stage of their growth.

          We extract and process minerals, oil and gas from our production operations located primarily in australia, the americas and southern africa. We sell our products globally with sales and marketing taking place principally through Singapore and Houston, united States. in FY2014, our workforce consisted of approximately 123,800 employees and contractors at 130 locations in 21 countries.

          the safety and health of our people and of the broader communities in which we operate are central to the success of our organisation. regardless of where our people are located, the area of the organisation in which they work or the type of work they undertake, we strive to create an environment that is free from occupational illness or injury.

          the long-term nature of our operations allows us to build collaborative community relationships. our size and scope mean we can make a meaningful contribution to communities in which we operate, while we support the continued development of global economic growth.

          We have strong governance processes in place, high standards of ethical and responsible behaviour, and we are an active contributor to societal development. We care as much about how results are achieved as we do about the results themselves. our BHP Billiton Code of Business Conduct and specific internal policies prohibit bribery and corruption in all our business dealings regardless of the country or culture within which our people work.


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          1

          Strategic Report

        2. Our structure

          BHP Billiton operates under a Dual listed Company (DlC) structure, with two parent companies BHP Billiton limited and BHP Billiton Plc operated as a single economic entity, run by

          a unified Board and management team. our headquarters are located in Melbourne, australia.

          BHP Billiton limited has a primary listing on the australian Securities exchange (aSX) in australia. BHP Billiton Plc has a premium listing on the uK listing authority’s official list and its ordinary shares

          are admitted to trading on the london Stock exchange (lSe) in the united Kingdom and a secondary listing on the Johannesburg

          Stock exchange (JSe) in South africa. in addition, BHP Billiton limited american Depositary receipts (aDrs) and BHP Billiton Plc aDrs trade on the new York Stock exchange (nYSe) in the united States.

          our operating Model describes the way the Company is organised and sets out the relationship between the Businesses, Group Functions and Marketing. the operating Model defines how we work, how we are organised and how we measure performance.

          • Businesses: our assets, operations and interests are separated into five business units. these Businesses are: Petroleum and Potash; Copper; iron ore; Coal; and aluminium, Manganese and nickel. the operating Model has been designed to ensure that decision-making remains as close to the Businesses as possible.

          • Group Functions: Group Functions support the Businesses and operate under a defined set of accountabilities authorised by the Group Management Committee (GMC). our Group Functions are primarily located in Melbourne, london and Singapore.

          • Marketing: Marketing is responsible for selling our products and for the purchase of all major raw materials; managing the supply chain from assets to markets and raw materials from suppliers to assets; achieving market clearing prices for the Group’s products; managing price risk; and developing a single Company view of the markets.

          the core principles of the operating Model include mandatory performance requirements, common organisational design, common systems and processes, and common planning and reporting.

          the operating Model is designed to deliver a simple and scalable organisation to achieve a sustainable improvement in productivity by providing performance transparency, eliminating duplication

          of effort and enabling the more rapid identification and deployment of best practice.

        3. Strategic context

    the mineral and energy commodities we produce are crucial at

    all stages of economic development. emerging economies require construction materials like steel as their populations expand and new cities and heavy industry develop. as economies grow and people become wealthier, a consumer economy emerges and steel intensity slows while demand increases for materials that are used in consumer goods, such as copper. agricultural demand increases steadily with income.


    access to energy underpins economic development. the most rapid demand growth comes at the earliest stages when people first gain access to modern energy supplies. in the next 20 years, we expect

    image

    2

    our assets

    1.7 billion people to gain access to electricity for the first time. reliable and affordable energy supports the development of industry and as incomes rise, more people can buy consumer goods, like cars and appliances, further increasing the demand for energy.

    We are proud that the supply of our products supports global economic growth and development, with the associated reduction in poverty and improvement in living standards. Continued global development depends on access to affordable energy and other critical resources.

    image

    3 Corporate Governance Statement

    Demand for energy is widely expected to increase by more than 30 per cent in the next 20 years, with two thirds of new demand originating from asia and half from China and india. africa is expected to see the fastest growth, albeit from a lower base. the way these regions meet their energy needs will significantly influence commodity demand.

    every nation will choose a different mix of energy sources, which balances affordability and security of supply. the intergovernmental Panel on Climate Change (iPCC), the international energy agency and others believe that over the next few decades fossil fuels will remain central to the energy mix as their affordability and the scale of existing infrastructure make them hard to practically replace, although their exact percentage varies across a range of scenarios.

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    4

    Remuneration Report

    our strategy is tied to economic growth in both emerging and developed economies. Sustainable growth requires an effective response to climate change. BHP Billiton accepts the iPCC’s assessment of climate change science, which has found that warming of the climate is unequivocal, the human influence

    is clear and physical impacts are unavoidable. We believe that the world must pursue the twin objectives of limiting climate change to the lower end of the iPCC emission scenarios in line with current international agreements, while providing access

    to the affordable energy required to continue the economic growth essential for maintaining living standards and alleviating poverty.

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    5

    Directors’ Report

    the global challenge of climate change remains a priority for us. our approach to investment decision-making and portfolio management and the diversity of our overall portfolio positions us not only to manage and respond to changes, but also to capture opportunities to grow shareholder value over time. We are taking action by focusing on reducing our emissions, increasing our preparedness for physical climate impacts and working with others, including industry and governments, to support effective responses to climate change.

    We support development of a long-term policy framework that uses a portfolio of complementary measures, including a price on

    carbon that addresses competitiveness concerns, support for energy efficiency and low emissions technologies, and measures to build resilience. a price on carbon is an effective measure to drive greenhouse gas emission reductions and technological innovation. to effectively address the challenge of climate change, there must be a significant focus on developing and deploying low-emissions technologies. We will, through material investments in low-emissions technology, contribute to reducing emissions from fossil fuels.



    1.1.4 FY2014 performance highlights

    Performance highlights during FY2014 included the following:

    image image

    9 per cent reduction


    Total recordable injury frequency. no fatalities at our operated assets.


    121 US cents

    Total dividend per share,

    an increase of four per cent.


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    as at 30 June 2014. US$2.9 billion

    US$179 billion Market capitalisation

    image

    increase

    9 per cent

    increased by two per cent.

    US$67.2 billion Revenue

    Sustainable productivity-led gains delivered during FY2014.


    Production increase on a copper equivalent basis. record production at 12 operations and

    across four commodities.


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    increased by 26 per cent.

    US$25.4 billion Net operating cash flow


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    reduction

    1.7 million tonnes

    Greenhouse gas

    emissions (Co2-e).


    image image


    Attributable profit


    US$13.8 billion

    US$ million

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    25,000


    20,000


    15,000

    Underlying EBIT


    US$22.9 billion

    US$ million

    35,000


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    30,000


    25,000


    20,000

    Dividends determined


    US$6.4 billion

    US$ million

    7,000


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    6,000


    5,000


    4,000

    Community investment


    US$241.7 million

    US$ million

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    100

    250


    200


    141.7

    150



    10,000

    15,000

    3,000


    100


    5,000


    10,000


    5,000


    2,000

    50

    1,000


    2010

    2011

    2012(1)

    2013(1)

    2014

    2010

    2011

    2012(1)

    2013(1)

    2014

    2010

    2011

    2012

    2013

    2014

    2010

    2011

    2012

    2013

    2014

    0 0 0 0



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    1. restated in the Financial Statements to be disclosed on the same basis as FY2014.

    2. includes BHP Billiton’s equity share for both operated and non-operated joint venture operations.

    BHP Billiton corporate charitable entities Expenditure (2)

    1.1.5 About this Strategic Report

    this Strategic report meets the requirements of the Strategic reporting required by the uK Companies act and the operating and Financial review required by the australian Corporations act.

    this Strategic report provides insight into BHP Billiton’s strategy, operating and business model and objectives. it describes the principal risks the Company faces and how these risks might affect our future prospects. it also gives our perspective on our recent operational and financial performance.

    We intend this disclosure to assist shareholders and other stakeholders to understand and interpret the Consolidated Financial Statements prepared in accordance with international Financial reporting Standards (iFrS) included in this annual report. the basis of preparation of the Consolidated Financial Statements is set out in note 1 ‘accounting policies’ to the Financial Statements. to obtain full details of the financial and operational performance of BHP Billiton this Strategic report should be read in conjunction with the Consolidated Financial Statements and accompanying notes.

    We have excluded certain information from this Strategic report

    on the basis that including the information would cause unreasonable prejudice to the Group. this is because such disclosure could be misleading due to the fact it is premature or preliminary in nature, relates to commercially sensitive contracts, would undermine confidentiality between the Group, and its suppliers and clients, or would otherwise unreasonably damage the business. the categories of information omitted include forward looking estimates and projections prepared for internal management purposes, information regarding the Group’s assets and projects, which is developing and susceptible to change, and information relating to commercial contracts and pricing modules.

    Section 1 of this annual report 2014 constitutes our Strategic report 2014. references to sections beyond section 1 are references to sections in this annual report 2014. Shareholders may obtain a hard copy of the annual report free of charge by contacting our registrars, whose details are set out in our Corporate Directory

    at the end of this annual report.


    these forward looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this annual report. readers are cautioned not to put undue reliance on

    image

    1

    Strategic Report

    forward looking statements.

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    2

    our assets

    For example, our future revenues from our operations, projects or mines described in this annual report will be based, in part, upon the market price of the minerals, metals or petroleum products produced, which may vary significantly from current levels. these variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.

    other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals, petroleum

    or metals we produce; activities of government authorities in the countries where we are exploring or developing projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; labour unrest; and other factors identified in the risk factors in section 1.7.2

    of this annual report.

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    3 Corporate Governance Statement

    except as required by applicable regulations or by law, the Group does not undertake to publicly update or review any forward looking statements, whether as a result of new information or future events.

    Past performance cannot be relied on as a guide to future performance.

    1.1.7 Proposed demerger of assets

    on 19 august 2014, we announced plans to create an independent global metals and mining company based on a selection of

    BHP Billiton’s high-quality aluminium, coal, manganese, nickel

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    the annual report 2014 is available online at .

    and silver assets. Separating these assets via a demerger has

    the potential to unlock shareholder value by significantly simplifying

    the BHP Billiton Group and creating a new company specifically

    1.1.6 Forward looking statements

    this annual report contains forward looking statements, including statements regarding trends in commodity prices and currency exchange rates; demand for commodities; production forecasts; plans, strategies and objectives of management; closure or divestment of certain operations or facilities (including associated costs); anticipated production or construction commencement dates; capital costs and scheduling; operating costs; anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; and tax and regulatory developments.

    Forward looking statements can be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. these statements discuss future expectations concerning

    5

    Directors’ Report

    the results of operations or financial condition, or provide other forward looking statements.

    designed to enhance the performance of its assets.

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    once simplified, BHP Billiton will be almost exclusively focused

    4

    Remuneration Report

    on our large, long-life iron ore, copper, coal, petroleum and potash basins. With fewer assets and a greater upstream focus, we plan to reduce costs and improve the productivity of our largest Businesses more quickly. as a result, our portfolio is expected to generate growth in free cash flow and a superior return on investment.

    a final Board decision on the proposed demerger will only be made once the necessary government, taxation, regulatory and other third party approvals are secured on satisfactory terms. once the necessary approvals are in place, shareholders will have the opportunity to vote on the proposed demerger.

    image For additional information on the proposed demerger of assets, refer to section 1.6.4 of this Annual Report

    image


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      1. BHP Billiton locations


        image

        6


        40



        7


        4


        37

        38



        leum and Potash er

        re


        nium, Manganese and Nickel


        39 1728


        26

        2

        15 10 21 22

        32

        s


        Petroleum and Potash

        27 24

        34 29

        30

        12 18

        33 23

        Copper 8

        Coal

        Iron Ore 26

        BAliulmliniiutmo, Mnangalneose candaNitckielons Offices

        PETROLEUM AND POTASH

        image

        Ref Country Asset Description Ownership

        COPPER

        image

        Ref Country Asset Description Ownership

        1 uS onshore uS onshore shale liquids and gas fields

        image

        in arkansas, louisiana and texas

        <1–100%

        1. australia Cannington Silver, lead and zinc mine located

          image

          in northwest Queensland

          100%

          1. australia australia

            Production unit


            image

            image

          2. uS Gulf of Mexico Production unit

            operated offshore oil fields and onshore gas processing facilities in Western australia and Victoria

            operated offshore oil and gas fields in the Gulf of Mexico

            40–90%


            35–44%

        2. Chile escondida the world’s largest copper producing

          image

          mine, located in northern Chile

        3. australia olympic Dam australia’s biggest underground

          image

          copper mine, also producing uranium, gold and silver

          57.5%


          100%

          image

          4 Pakistan Pakistan Production unit

          operated onshore oil and gas fields 38.5%

        4. Chile Pampa norte Consists of the Cerro Colorado and

          Spence open-cut mines, producing

          100%

          5 trinidad and tobago

          trinidad Production unit

          operated offshore oil and gas fields 45%

          copper cathode in northern Chile

          image

        5. Peru antamina (2) open-cut copper and zinc mine,

          located in northern Peru


          33.8%

          image


          image

          6

          uK

          uK Production unit (1)

          operated offshore oil and gas fields

          16– 46.1%

          7

          algeria

          algeria Joint interest unit (2)

          Joint interest onshore oil and gas unit

          38%

          8

          australia

          australia Joint

          Joint interest offshore oil and

          8.3–50%

          IRON ORE


          image

          Ref Country Asset Description Ownership

          interest unit (2)

          gas fields in Bass Strait and

        6. australia Western australia integrated iron ore mines, rail and

        85%


        9 uS Gulf of Mexico

        north West Shelf

        image

        Joint interest offshore oil and


        image

        5–44%

        iron ore

        port operations in the Pilbara region of Western australia

        Joint interest unit (2)

        gas fields in the Gulf of Mexico

        16 Brazil Samarco (2) open-cut iron ore mine, concentrators

        and pelletising facilities

        50%

        image image


        1. Liverpool Bay was divested in FY2014.

        2. Non-operated joint venture.

        3. Completed sale of Navajo Mine and will retain control until final transfer. Locations are current at 11 September 2014.


        image

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        1

        Strategic Report

        35



        42

        image

        19

        2

        our assets

        41 1

        9 3


        5

        20

        25


        31

        image

        14


        3 Corporate Governance Statement

        13 16

        11


        36


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        COAL


        image

        Ref Country Asset Description Ownership

        ALUMINIUM, MANGANESE AND NICKEL continued


        image

        image

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        4

        Remuneration Report

        Ref Country Asset Description Ownership

        17 South africa energy Coal

        image

        South africa

        open-cut and underground energy coal mines and processing operations

        50–90%

        1. South africa Manganese

          South africa

          integrated producer of manganese ore and alloy

          44.4–60%

          18 australia new South Wales open-cut energy coal mine and coal

          100%

          image

          image

        2. Mozambique Mozal aluminium smelter near Maputo 47.1%

          image

          energy Coal

          image

          19 uS new Mexico Coal (3)

          preparation plant in new South Wales

          two energy coal mines in new Mexico 100%

        3. australia nickel West integrated sulphide mining,

          image

          concentrating, smelting and refining operation in Western australia

          100%

          20 Colombia Cerrejón (2) open-cut energy coal mine with

          image

          integrated rail and port operations

          33.3%

        4. australia Worsley integrated bauxite mine and alumina

          refinery in Western australia

          86%

          21 australia BHP Billiton

          Mitsubishi alliance

          open-cut and underground metallurgical coal mines in the Queensland Bowen Basin and Hay Point Coal terminal


          to rail and port facilities


          33

          australia

          Melbourne

          Global Headquarters


          ALUMINIUM, MANGANESE AND NICKEL


          34

          australia

          Perth

          aluminium, Manganese and nickel Head office iron ore Head office




          35

          Canada

          Saskatoon

          Potash Head office

          Ref Country Asset

          Description

          Ownership

          36

          Chile

          Santiago

          Copper Head office

          24 South africa aluminium

          one aluminium smelter at richards Bay

          100%

          37

          Malaysia

          Kuala lumpur

          Global Shared Services Centre

          22

          australia

          BHP Billiton Mitsui Coal

          two open-cut metallurgical coal mines in the Bowen Basin, Central Queensland

          80%

          23

          australia

          illawarra Coal

          underground metallurgical coal mines in

          100%

          southern new South Wales, with access

          50%

          image

        5. Brazil alumar (2) aluminium refinery and smelter 36–40%

          image


          image

          image

          5

          Directors’ Report

          BHP BILLITON PRINCIPAL OFFICE LOCATIONS


          Ref Country Location Office

          image

        6. australia Brisbane Coal Head office



        image


        image


        image


        South africa

        25 Colombia Cerro Matoso integrated laterite ferronickel mining and 99.9%

        smelting complex in northern Colombia


        38 Singapore Singapore Marketing Head office 39 South africa Johannesburg Corporate office


        26 australia

        Manganese

        Producer of manganese ore in the

        60%

        40 uK

        london

        Corporate office


        australia

        northern territory and manganese alloys


        41 uS

        Houston

        Petroleum Head office

        in tasmania


        42 uS new York Corporate office


        image

      2. Chairman’s Review



        image


        Dear Shareholder

        i am pleased to report that your Company delivered strong performance this past financial year. BHP Billiton reported an Attributable profit of uS$13.8 billion and net operating cash flow of uS$25.4 billion. these strong results were underpinned by increased production and productivity-led cost efficiencies.

        our balance sheet remains strong and we have maintained our solid ‘A’ credit rating. the full-year progressive base dividend was increased by 4.3 per cent to 121 uS cents per share. At the same time, the Company has continued to invest in high-return growth options within the existing portfolio.

        Markets for our commodities have been affected by the mixed global economic environment, with solid but moderately slower Chinese growth, underlying momentum in the united States and some positive signs in Japan, while the european union has remained weak. overall, demand for our commodities continues to be strong, underpinning the long-term outlook for our portfolio of products.

        We continuously review our strategy against changes in the external environment, including climate change. We consider various scenarios and the risks and opportunities facing the natural resources sector and seek to optimise the investments we make

        on behalf of shareholders.

        our position on climate change is clear. Sustainable growth requires an effective response to climate change. We accept the intergovernmental Panel on Climate Change’s assessment that warming of the climate is unequivocal, the human influence is clear and the physical impacts are unavoidable. We believe that the Board’s approach to strategy, investment decision-making and portfolio management, as well

        as the diversity of our overall portfolio, positions us to manage and respond to changes and capture opportunities to grow shareholder value over time. We believe that the resilience of our portfolio under a range of climate change scenarios is underpinned by its diversity and by the relatively short pay-back periods for most of our present and future investments in fossil fuels production. BHP Billiton

        is committed to reducing greenhouse gas emissions in its own operations, to actively participating in the development and deployment of low-emissions technologies and to being a leader in our sector on climate change action and advocacy.

        next year marks the 130th anniversary of the founding and stock exchange listing of the Broken Hill Proprietary Company limited. over these years the Company has reshaped its business to maintain its industry leadership. We moved from mining silver, lead and zinc at Broken Hill, to producing steel, and then to petroleum in Bass Strait, iron ore in the Pilbara, metallurgical coal in the Bowen Basin and copper in the Andes.

        For the past 10 years we have also been simplifying our portfolio and looking at ways to make your Company simpler and more productive. in the last two years alone we have sold uS$6.7 billion of assets at attractive prices. this year, we have proposed another step in our evolution with the demerger of selected aluminium, coal, manganese, nickel and silver assets. this proposed demerger will allow BHP Billiton to improve the productivity of our largest businesses more quickly and create a new global metals and mining company specifically designed to enhance the performance of the demerged assets. All BHP Billiton shareholders would retain their

        existing shares in BHP Billiton and receive shares in the new company pro rata with your BHP Billiton shareholding. Following the demerger, BHP Billiton would seek to steadily increase or at least maintain its dividend per share in uS dollar terms – implying a higher payout ratio. Subject to final Board approval to proceed, shareholder approval and the receipt of satisfactory third party approvals, the demerger is expected to be completed in the first half of the 2015 calendar year.

        Against the backdrop of external and organisational change, we continue to be guided by Our BHP Billiton Charter, which defines our values. our first Charter value is Sustainability and we maintain a relentless focus on the health and safety of our people and the communities in which we operate. this year, we reported a record low total recordable injury frequency and no fatalities at our operated assets during the period. While this is an encouraging result, our efforts to protect the health and safety of our people will be unrelenting.

        We are committed to making a positive contribution to the communities where we live and conduct our business. this year,

        we contributed one per cent of pre-tax profit, investing uS$242 million across a wide range of programs and activities to support our communities. these funds support local programs, such as the leAD project which seeks to improve the lives of smallholder farmers in the rural Maputo Province of Mozambique; an innovative education program in Pakistan that has seen 800 children graduate from the program with another 2,000 currently studying in 13 model schools; the AnDA project which addresses the needs of people displaced

        by conflict and vulnerable communities in the Cordoba District of Colombia to complement poverty reduction efforts by the national government; and Bush Blitz, a unique species discovery program in Australia.

        our community programs are in addition to the uS$9.9 billion in taxes and royalties we paid to governments and our broader economic contribution in terms of jobs, capital investment and support of local businesses.

        i would like to take this opportunity to acknowledge David Crawford who will retire from the BHP Billiton Board in november 2014. David has served with distinction on the board of BHP and BHP Billiton for 20 years. in announcing our plans to create an independent global metals and mining company we said that David would become the new company’s inaugural chairman. His skills and experience make David the right person to guide the new company through its entry into the global resources sector.

        in line with our planned approach to Board succession, we

        have appointed Malcolm Brinded to the Board as a non-executive Director and member of the Sustainability Committee. Malcolm’s deep experience in energy, governance and sustainability will make a significant contribution to the Board.

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        in summary, a strong management team and over 123,000 talented employees and contractors in 21 countries have improved safety, increased production and delivered more value for shareholders and all our stakeholders. Your Company does make a positive difference. BHP Billiton helps lift living standards for people around the world and we work hard to add value to the communities, regions and countries where we live and do business.


        Jac Nasser AO

        Chairman


        8 — BHP Billiton AnnuAl RePoRt 2014

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      3. Chief Executive Officer’s Report


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        i am pleased to report that BHP Billiton delivered a strong set of financial results in FY2014, with improvements in operating performance and safety supported by a continued focus on

        productivity. this performance was achieved against a background of improving economic conditions in the united States, Japan and the european union, solid but slower Chinese economic growth and a decline in key commodity prices in a highly competitive global marketplace.

        in a year of record production we had no fatalities at our operated assets and improved our total recordable injury frequency performance by nine per cent to 4.2 injuries per million hours worked. While we are encouraged to have recorded a year without fatalities, we must never rest on past performance. We will continue to relentlessly identify and manage material health and safety risks to protect

        our people and communities.

        Annual production records were achieved at 12 of our operations and across four commodities. Western Australia iron ore and Queensland Coal both increased annual production volume by more than 20 per cent as we delivered more tonnes from existing infrastructure and growth projects ahead of schedule. these results were supported by our onshore uS petroleum asset delivering

        a 73 per cent increase in petroleum liquids production.

        our safety performance improves through our continued focus on accelerating sustainable improvements in productivity by

        finding more efficient and effective ways of performing day-to-day operations. We delivered more than uS$6.6 billion of sustainable productivity-led gains over the last two years. there are more achievements in productivity still to come as our teams continue

        to innovate and learn from each other, replicating best practice and operating on a common data platform across the organisation.

        We continue to invest selectively in those projects that meet our demanding criteria. in FY2014, we reduced our share of exploration and capital expenditure by 32 per cent to uS$15.2 billion and expect this to decline to uS$14.8 billion in FY2015. this approach has increased internal competition for capital, improved our capital efficiency and provides for long-term, sustainable shareholder value.


        in August 2014, we announced a proposal to create an independent global metals and mining company based on a selection of

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        Strategic Report

        BHP Billiton’s high-quality aluminium, coal, manganese, nickel and silver assets. Separating these assets via a demerger has the potential to unlock shareholder value by significantly simplifying

        the BHP Billiton Group and creating two portfolios of complementary assets. once simplified, BHP Billiton would be almost exclusively focused on our large, long-life iron ore, copper, coal, petroleum

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        our assets

        and potash basins. With fewer assets and a greater upstream focus, BHP Billiton would be able to reduce costs and improve the productivity of our largest businesses more quickly. the proposed demerger remains subject to the receipt of satisfactory third party approvals, final Board approval and shareholder vote.

        in addition to our work to simplify BHP Billiton’s portfolio, we continue to support the communities where we operate. We support local economies through employment, infrastructure development, taxes and royalties, as well as purchasing local goods and services. We are part of these communities and we strive to be a positive and active participant in community life. in FY2014, our voluntary community investment amounted to uS$242 million.

        We are proud that the supply of our products supports global economic growth and development, with the associated reduction in poverty and improvement in living standards. Continued global development depends on access to affordable energy and other critical resources.

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        3 Corporate Governance Statement

        Sustainable growth requires an effective response to climate change. We accept the intergovernmental Panel on Climate Change’s assessment that warming of the climate is unequivocal, the human influence is clear, and physical impacts are unavoidable. We are taking action by focusing on reducing our emissions, increasing our preparedness for physical climate impacts and working with others, including industry and governments, to support effective responses to climate change. We will, through material investments in

        low-emissions technology, contribute to reducing emissions from fossil fuels. We view climate change as a critical element in our approach to risk management across our business.

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        Remuneration Report

        in everything we do, we are guided by Our BHP Billiton Charter values of Sustainability, integrity, Respect, Performance, Simplicity and Accountability. these are the foundation of who we are, and how we perform our role as an active and engaged corporate citizen. i am honoured to be part of a company where we live

        our values every day.

        Finally, i would like to thank all our suppliers, customers, host communities and shareholders for their continued support over the past year as we strive to be a valued partner of choice. i would especially like to thank our employees and contractors whose commitment and contribution is the cornerstone of the success

        of this Company.


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        Andrew Mackenzie

        5

        Directors’ Report

        Chief executive officer


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        BHP Billiton AnnuAl RePoRt 2014 — 9


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      4. Our strategy and business model


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        1. Our consistent strategy

          Our purpose

          our corporate purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

          Our strategy

          our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.

          our unique position in the resources industry is due to our proven and consistent strategy. in line with our strategy, we pursue growth opportunities consistent with our core skills of:

          • evaluating, developing and extracting resources in our Businesses;

          • distributing and selling our products, and managing financial risk associated with our revenue through Marketing;

          • defining and governing world-class functional standards, which are implemented Group-wide through our Group Functions.

          We operate in a dynamic external environment and this strategy has delivered strong company performance over time which,

          in turn, underpins the creation of long-term sustainable value

          for our shareholders, customers, employees and the communities in which we operate. We aim to deliver long-term sustainable value rather than focusing on short-term returns.


          Our values

          in pursuing our strategy through all stages of the economic and commodity cycles, we are guided by Our BHP Billiton Charter values of Sustainability, integrity, respect, Performance, Simplicity

          and accountability.

          our overriding commitment is to ensuring the safety of our people, and respecting our environment and the communities in which

          we work. this commitment informs everything we do and influences every aspect of our work.

          operational capability is fundamental to our strategy. it is reflected in Our Charter, in particular our values of Performance – achieving superior business results by stretching our capabilities, and Simplicity – focusing our efforts on the things that matter most.

          Our success factors

          We are successful when:

          • our people start each day with a sense of purpose and end the day with a sense of accomplishment;

          • our communities, customers and suppliers value their relationships with us;

          • our asset portfolio is world-class and sustainably developed;

          • our operational discipline and financial strength enables our future growth; and

          • our shareholders receive a superior return on their investment.

            our key performance indicators presented in section 1.10 of this annual report enable our Group Management Committee (GMC) to measure our performance.

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            Development

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            Strategic Report

        2. Our business model


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          Exploration and evaluation

          Extraction, processing and transportation


          Marketing and logistics



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          Exploration and evaluation Extraction, processing and transportation


          • Discovery through brownfield and greenfield exploration.

          • Evaluating our portfolio.

          • Divestment and acquisition.

            over the past six years, brownfield exploration has increased our reserve base around our portfolio of existing assets in large resource basins, which now provide us with significant growth opportunities. this has allowed us to reduce brownfield exploration expenditure

            and rationalise our greenfield exploration program to focus on copper in Chile and Peru and conventional oil and gas, predominantly offshore in the Gulf of Mexico and Western australia.

            We evaluate the results of our brownfield and greenfield exploration to identify future growth projects consistent with our strategy to own and operate large, long-life, low-cost, expandable, upstream assets. We also continually evaluate our portfolio and consider divestment and acquisition opportunities.

              • Open-pit and underground mining.

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                our assets

              • Extracting conventional and unconventional oil and gas.

              • Processing and refining.

                across our global operations, the diversification of our portfolio of assets by commodity, geography and market continues to be one of our differentiating features. our goal is to safely operate all our assets at capacity through mining, extracting, processing and transporting commodities.

                We continue to set production records at a number of assets. through the development and use of standard operating practices and technology, we are driving efficiencies through improved capital intensity, labour productivity and increased utilisation

                of plant and machinery.

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                3 Corporate Governance Statement

                our extraction and processing activities are mindful of our ongoing sustainability obligations, including rehabilitation at the end of the asset life.


                Development Marketing and logistics


                • Evaluating and developing projects.

                  the evaluation and development of large-scale resource projects generates significant value for BHP Billiton. We have a number

                  of high-quality growth projects currently under development. We also have a large number of growth opportunities in our project pipeline in varying stages of evaluation.

                  in our development process, these projects progress through feasibility to execution only after external approvals. our rigorous internal review process requires projects to pass through various tollgates for internal approvals at each stage, including Board approval for major projects.

                  Potential expansion projects must compete for capital in BHP Billiton and are only approved if they meet our strict criteria for investment.

                  BHP Billiton’s Marketing network manages the Group’s revenue line and is responsible for:

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                  Remuneration Report

              • Selling the Group’s products and purchasing all major raw materials.

              • Supporting the Businesses to maximise the value of upstream resources.

              • Managing the supply chain to customers.

              • Achieving market clearing prices for the Group’s products.

              • Developing the Group-wide view of the markets and future pricing.

                the primary hub for our marketing activities is Singapore, while our marketing of oil and gas is headquartered in Houston, united States. in addition, we have marketers located close to our customers in

                14 cities around the world.

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                Directors’ Report

                Marketing’s responsibilities require an active presence in the various commodities markets, the global freight market and the crude and gas pipeline transportation market, through which we manage the supply chain for our products and develop strong integrated relationships between our Businesses and our customers.

                our market insight is strengthened by the multi-commodity nature of our organisation, our proximity to our customers and the flow of information in our centralised marketing structure.


                a description of our risk factors, including those that impact our business model, and our approach to risk management are presented in section 1.7 of this annual report.



        3. External factors and trends

    Economic outlook

    the global economy grew at a moderate rate in FY2014. Momentum in the united States, Japan and the united Kingdom was underpinned by central bank monetary policy. europe’s economy improved marginally, although the recovery was constrained by high levels

    of unemployment. emerging markets, including China, experienced a moderate slowdown.

    in a relative sense, the Chinese economy continues to grow strongly with signs that it is rebalancing. Consumption continued to be supported by higher household incomes while fixed asset investment softened, led by the property sector, as the central bank restricted access to credit. rapid credit growth in the non-bank financial sector remained an important concern for policy makers.

    We remain confident in the short-term to medium-term outlook for the Chinese economy. Measured stimulus recently introduced by the government demonstrates their commitment to maintain economic growth above seven per cent. We believe consumption and services will continue to increase in importance, while the market’s role

    in allocating capital will be enhanced. Greater transparency within the fiscal system is also expected to reshape the relationship between central and local government.

    the underlying performance of the uS economy continued to improve despite the significant disruption caused by severe weather


    Climate change

    the physical impacts of climate change on our operations are uncertain and particular to geographic circumstances. in addition, a number of national governments have already introduced

    or are contemplating the introduction of regulatory responses to greenhouse gas emissions from the combustion of fossil fuels to address the impacts of climate change. these physical effects and regulatory responses may adversely impact the productivity and financial performance of our operations.

    Other external factors and trends

    a number of external factors and trends have had and may continue to have a material impact on our financial condition and results

    of operations, as described in section 1.15.1 of this annual report. these factors include commodity prices, exchange rates, changes in product demand and supply, and operating costs.

    the chart below presents the price movements in our core Business commodities over the past 10 years. over this period we have benefited from generally rising commodity prices while our diversified portfolio provides resilience to decreases in the price of some commodities.


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    Commodity prices 2005– 2014

    Iron ore, Metallurgical coal,

    in the March 2014 quarter. the curtailment of quantitative easing appears to have had a limited impact on sentiment as a solid increase in demand reflects a stronger labour market, rising disposable incomes, and higher equities and housing prices. Business investment has been a weak link in the recovery so far as companies have responded slowly to better economic conditions, despite higher

    levels of profitability. an increase in capital spending by the global business community will be required to sustain the recovery in

    the medium term.

    the Japanese economy has responded strongly to expansionary monetary and fiscal policy over the past year. investment spending and wages increased as corporate profits benefited from the depreciation of the Yen, while an increase in the national sales tax in april had a limited impact on consumption. these factors have increased the potential for faster growth in the short term, although a longer-term, sustainable recovery will be contingent on the scale

    Energy coal, Crude oil

    (US$/unit)

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    250


    200


    150


    100


    50

    Copper, Gas

    (US$/unit)

    18


    15


    12


    9


    6


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    and speed of structural reform.

    0

    2005 2006 2007 2008 2009 2010 2011 2012

    2013

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    2014

    With regard to the global economy, stronger uS growth and an associated tightening of monetary policy could result in the rapid outflow of capital from emerging economies. However, developing nations with sound macroeconomic fundamentals would be less likely to experience a severe impact from this transition.

    Iron ore Metallurgical coal Gas Energy coal Crude oil Copper


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    a summary of the pricing trends for our most significant commodities for FY2014 is presented in section 1.15.1of this annual report.


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    1.5.4 Corporate planning

    at BHP Billiton, we have a long-standing and robust corporate planning process, which is central to the effective development and delivery of our strategy.

    our planning process continuously reviews our strategy against a constantly changing external environment and the risks and opportunities this presents, to optimise both our returns to

    our shareholders, and our broader contribution to society.

    Core principles

    the corporate planning process is designed with the following core principles:


    Corporate planning framework

    an annual Board strategic planning review is the start of each corporate planning cycle, where the GMC and the Board actively discuss the Group’s strategy. a key outcome is the Ceo Message to all employees which sets the long-term direction of the Group and aligns expectations.

    the Directional Planning (long-term strategic planning) phase begins with the Ceo Message and the issuing of long-term scenarios. Businesses use the Ceo Message and scenarios

    to prepare their Directional Plans, which include life of asset resource plans. Plans are discussed with the GMC at the Business Directional appraisals.

    We prepare a Group-wide 20-year Plan which includes input from the Businesses’ Directional Plans. a total annual capital allocation limit is set to maximise total shareholder returns, while ensuring financial risks are appropriately mitigated. Within this capital ceiling, major growth options are optimally sequenced over the 20-year Plan through our capital allocation process.

    the capital allocation process includes analysis of net present value (nPV), internal rates of return (irr), return on capital (roC) and margin analysis to inform decision-making. this process is further described in section 1.6.3 of this annual report. all available growth



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    Strategic Report

    1.5.4 Corporate planning continued

    the flowchart below illustrates our corporate planning framework.



    Board Strategic Planning (20+ years)

    CEO Message


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    Refreshed annually


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    Maximise shareholder returns


    Business Directional Plans and Appraisal


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    CEO Letter of Intent


    Business Delivery Appraisals (5-year Plans and 2-year Budget)


    options are assessed and prioritised to generate a high-value and capital-efficient portfolio which provides flexibility to return excess cash to shareholders. the increased competition for capital has improved our capital productivity.

    the Delivery Planning (short-term to mid-term planning) phase begins with the Ceo letter of intent which provides capital guidance and sets the context for the Business five-year plans and two-year budgets. again, plans are discussed with the GMC, this time at

    the Business Delivery appraisals.

    We believe that the rigour of our corporate planning process, combined with the flexibility it provides the Group to quickly respond to an inherently dynamic external environment,

    is essential to maximise total shareholder returns.

    Scenarios

    the corporate planning process is underpinned by scenarios that encompass a wide spectrum of potential outcomes for key global uncertainties driven by factors external to BHP Billiton. Designed to interpret technical, economic, political and global governance trends facing the resources industry, the scenarios offer a means by which to explore potential portfolio discontinuities and opportunities, as well as to test the robustness of decisions.

    it should be noted that the scenarios do not constitute preferred outcomes for BHP Billiton. the Company’s approach to critical global challenges, such as the importance of addressing climate change, continues to be based on Our Charter values, including our value

    of Sustainability. our position on climate change is discussed further in section 1.6.1.

    the starting point of our scenario development is the construction of a Central Case, built through an in-depth, bottom up analysis using rigorous processes, benchmarked with external views, thoroughly reviewed and endorsed annually by the GMC and the Board. Currently our Central Case considers expected levels of uS economic recovery, progressive development of China and india, integration of developing economies into a multi-polar economic environment, as well as action on climate change centred on national policies with short-term prioritisation to adaptation

    and a long-term shift to mitigation.

    the scenarios are designed to be divergent, but also plausible and internally consistent, spanning different potential future

    business environments. a description of the key characteristics of each of our scenarios is summarised below:

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    3 Corporate Governance Statement


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    image additional information relating to our sustainability performance

    5

    Directors’ Report

    for FY2014 is available in our Sustainability report 2014 and can be found online at image


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        1. Governance

    Governance and sustainability

    our Board governs the Group in a manner consistent with

    Our Charter values, our strategy and our commitment to a transparent and high-quality governance system. the Board has established

    a number of committees to assist it in exercising its authority and to monitor the performance of the Group. the Sustainability Committee assists the Board in oversight of health, safety,

    environment, community and climate change matters. this includes overseeing areas relating to risk control, compliance with applicable legal and regulatory requirements and overall health, safety, environment and community (HSeC) performance of the Group.

    the Board delegates authority to the Ceo to manage the Group in its pursuit of creating long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. established by the Ceo, the GMC is the Group’s most

    senior executive body. the GMC’s purpose is to provide leadership to the Group, determining its priorities and the way it is to operate, thereby assisting the Ceo in pursuing the corporate purpose. the GMC is a forum to debate high-level matters important to the Group and to ensure consistent development of the Group’s strategy.

    to link HSeC matters to remuneration, 20 per cent of the FY2014 short-term incentive opportunity for GMC members was based on HSeC performance. this was an increase from 15 per cent in FY2013, reflecting the importance the Board and GMC place on sustainability. the Sustainability Committee assists the remuneration Committee in determining appropriate HSeC metrics to be included in GMC scorecards and in assessing performance against those measures. the Board also has discretion over both the short-term and

    long-term incentive opportunities for GMC members and takes into consideration HSeC performance.

    Identifying and managing our material risks

    in addition to the legal requirements of the countries in which we operate, our approach to sustainability risks is defined by our HSeC-related Group level Documents (GlDs). these clearly describe our mandatory minimum performance requirements and accountabilities across the Group and are the foundation for

    developing and implementing management systems at our operations.

    our HSeC-related GlDs outline our approach to the Group’s material sustainability risks and highlight a commitment to international policies, standards and management practices. these include the principles and mandatory requirements of the position statements of the international Council on Mining and Metals (iCMM) Sustainable Development Framework, the united nations (un) Global Compact, the un Declaration of Human rights and the Voluntary Principles on Security and Human rights.

    We seek to ensure our customers, suppliers, agents, service providers and contractors maintain business practices and workplaces that are aligned with our GlDs. We also provide GlD performance requirements to our non-operated assets and seek to influence

    the asset to follow these requirements.

    our Risk Management GlD provides the framework for embedding risk identification and management into our business activities, functions and processes. this is the basis of an active and consistent risk-based approach to sustainability. We identify risks we consider material to our organisation and take into consideration the potential health, safety, environmental, community, reputational, legal and financial impacts. the severity of any particular risk

    is assessed according to the most severe impact associated with a specific risk. the objectives of the risk management process

    are to understand the nature and residual impact of the material risks for the Group and to ensure they are managed through the verification and effectiveness testing of critical controls. information relating to the material risks for the Group, including sustainability risks, is available in section 1.7 of this annual report.

    Operating with integrity and conducting business transparently to maintain our position as one of the world’s leading companies, we are committed to ethical business practices and high levels of

    governance in all our dealings. regardless of the country or culture within which our people work, our Anti-corruption GlD and Code of


    Business Conduct prohibit bribery and corruption in all our business dealings. Particulars in relation to the Code of Business Conduct and anti-corruption are referred to in section 3.17 of this annual report.

    Specific discussion on legal proceedings is available in section 6 of this annual report.

    Transparently reporting our payments to governments We believe that transparency of government revenue from the extraction of natural resources is an important element in the

    fight against corruption. BHP Billiton has been a supporter of the extractive industries transparency initiative (eiti) since its inception in 2002 and we continue to engage actively with eiti processes in countries where we operate. in line with our support for the eiti, we have reported in the Sustainability report 2014, payments

    of taxes and royalties derived from resource developments on a country-by-country basis. our payments to governments in FY2014 included uS$9.9 billion in company taxes, royalties and certain indirect taxes and approximately uS$1.5 billion in taxes collected on behalf of employees. More than 99 per cent of our payments were made to 14 countries. of these, our largest payments are made in australia, where we have the majority of our assets.

    Sustainability in our supply chain

    as a global organisation, we understand our responsibility to ensure we only engage with suppliers who have responsible and ethical business practices. relationships with our partner suppliers are managed in accordance with relevant contractual arrangements, Our Charter, our Code of Business Conduct, our Anti-corruption GlD and relevant HSeC GlDs.

    to identify sustainability risks across our supply chain, we use a risk-based approach within our Supply ‘Source to Contract’ GlD to support our suppliers’ alignment with our HSeC and business conduct requirements. these requirements include zero tolerance of a number of human rights infringements including child labour,

    inhumane treatment of employees and forced or compulsory labour. our suppliers are also required to adopt an open attitude towards legitimate activities of trade unions.

    Contracted suppliers are assessed on a matrix for commercial dependency versus supplier risk and assigned a tiered segmentation. a procedure to engage with each supplier is developed appropriate to the level of risk.

    Closure planning

    Closure planning is a key consideration in the planning and development of our projects and operations. We recognise the significant risks associated with poorly managed closure activities and seek to minimise these throughout the life cycle of our operations. in line with our Corporation Alignment Planning GlD, our operations are required to develop and maintain closure plans that address the details of rehabilitation activities for disturbed land, remediation requirements for contaminated land, and end uses for land and infrastructure. Closure plans are also required to include community livelihood opportunities post-closure, design and engineering specifications for structures remaining at closure and human resource strategies addressing retention and transition opportunities for employees. in addition, we require closure plans to be developed as part of our major capital investments to ensure we understand potential closure liabilities and have the opportunity to reduce them during the design stage. the closure plans provide the basis for estimating the closure costs and the associated accounting for closure and rehabilitation obligations. information on these provisions can be found in note 18 ‘Provisions’ to the Financial Statements in our annual report 2014.

    an ongoing internal closure planning audit program, established in FY2011, tests the effectiveness of the controls detailed in our Corporation Alignment Planning GlD. Findings from these audits are reported to the relevant Business Presidents, while summary

    reports are considered by the Sustainability Committee of the Board. During FY2014, 10 audits were conducted and, where required, improvements to the closure plan or provisions were implemented.

    1.14.2 Governance continued

    Addressing climate change

    addressing climate change is a Board governance and strategic issue. Successful implementation of our strategy requires us to sustainably develop our asset portfolio to deliver superior long-term shareholder returns.

    Climate change governance

    We recognise our responsibility to take action by focusing on reducing our emissions, increasing our preparedness for physical climate impacts and working with others, including our industry and governments, to enhance the global response to climate change. to effectively address the challenge of climate change, there must be significant focus on developing and deploying

    low-emissions technologies. We will, through material investments in low-emissions technology, contribute to reducing emissions from fossil fuels.

    there is uncertainty around the physical impacts of climate change and how the world will respond to these impacts or seek to mitigate climate change. in light of this, our investment decisions are informed by a comprehensive understanding of a range of possible climate change outcomes and the associated risks and opportunities to delivering shareholder value. We use a broad range of scenarios that consider critical global uncertainties (e.g. macroeconomic and geopolitical) and their impacts on supply and demand assumptions to test our portfolio and investment decision-making.

    our approach to addressing climate change is to identify emerging trends, develop strategies, coordinate activity across the Businesses and report our performance externally. our GMC has primary responsibility for the design and implementation of an effective position and response to climate change, and accountability for performance against our climate change metrics. We also seek input and insight from external experts, such as the Forum

    on Corporate responsibility.

    to reflect updates in scientific knowledge and global regulatory and political responses, we regularly review our position on climate change. We incorporate climate change considerations into our Group scenarios to understand potential impacts on our portfolio. We also conduct annual reviews of performance against Business greenhouse gas (GHG) targets to ensure we are on track to achieve our company target. the Sustainability Committee has considered a range of climate change scenarios and continues to monitor the actions being taken to manage a range of climate change impacts and policy responses.

    Our perspective on climate change

    We accept the intergovernmental Panel on Climate Change’s (iPCC) assessment of climate change science, which has found that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable. We believe the world must pursue the twin objectives of limiting climate change to the lower end of the iPCC emission scenarios in line with current international agreements, while providing access to the affordable energy required to continue the economic growth essential for maintaining living standards and alleviating poverty.

    We use the iPCC’s findings to build our understanding of the impacts climate change will have on our business and to inform our decision-making. limiting climate change will require substantial and sustained reductions of GHG emissions. our view is that

    an effective, long-term climate change policy framework should use a portfolio of complementary measures to reduce emissions and build resilience. this should include a price

    on carbon that addresses competitiveness concerns, support for energy-efficiency improvements, and the development and deployment of low-emissions technologies, together with

    measures to respond to the physical impacts of climate change.

    We will continue to take action to reduce our emissions and build the resilience of our operations, investments, communities and ecosystems to the impacts of climate change. recognising their role as policy makers, we engage with governments to enhance the global response. We work in partnership with resource sector peers to improve sectoral performance and increase industry’s influence in policy development to deliver effective long-term regulatory responses.


    The global challenge

    image

    1

    Strategic Report

    our diverse portfolio is important in meeting global demand for energy. We will continue to adjust the shape of our portfolio to match energy and commodity demand and meet society’s expectations while maximising shareholder returns.

    image

    2

    our assets

    our approach to investment decision-making and portfolio management ensures that climate change risks are identified, assessed and appropriately addressed. We have been applying an internal price on carbon in our investment decisions and portfolio evaluation for more than a decade and were early adopters of this approach. We maintain a view on carbon pricing using a carbon price protocol which we update regularly. our carbon price protocol tracks the progress of national commitments to tackle climate change throughout the world, including our major operating regions and customer demand centres, and considers various potential scenarios for how global emissions and policy will evolve over time. We look at the potential for reductions in emissions and the cost associated with those reductions to determine an appropriate price level for each relevant country or region. in doing so, we consider the effectiveness of different policies, political situations required to pass legislation, timing to implement reductions and the interaction between policy mechanisms.

    through a comprehensive and strategic approach to corporate planning, we work with a broad range of scenarios to assess our portfolio, including consideration of a range of policy responses to and impacts from climate change. our work suggests that

    image

    3 Corporate Governance Statement

    BHP Billiton’s portfolio diversification provides resilience to our overall asset valuation. the diversity of our overall portfolio, which includes energy (oil, coal and uranium) and minerals (including copper, premium quality iron ore and potash), uniquely positions us to manage and respond to changes and capture opportunities to grow shareholder value over time.

    Stranded assets and the ‘carbon bubble’

    the potential gap between the current valuation of fossil fuel reserves on the balance sheets of companies and in global equities markets and the reduced value that could result if a significant proportion of reserves were rendered incapable of extraction

    image

    4

    Remuneration Report

    in an economically viable fashion due to responses to climate change, is known as the ‘carbon bubble’. although this concept has been discussed by non-government organisations and academics for several years, there has recently been renewed interest in this topic, particularly from ratings agencies and investment analysts. there is, however, little consensus on what specific carbon prices, fossil fuel demand or market prices might trigger this devaluation.

    Providing access to the affordable energy required to continue economic growth is essential for maintaining living standards and alleviating poverty. under all current plausible scenarios, fossil fuels will continue to be a significant part of the energy mix for decades.

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    5

    Directors’ Report

    BHP Billiton uses a scenario framework, including forecasting commodity prices that considers critical global uncertainties (e.g. macroeconomic and geopolitical) and their impacts on supply and demand assumptions. using a range of carbon prices and commodity demand and pricing assumptions across a variety of internally consistent scenarios, we have determined that BHP Billiton’s overall asset valuation is not at material risk, the pay-back periods for most present and future investments

    in fossil fuels production are relatively short and the portfolio remains robust.



        1. Governance continued

          Mitigation

          We have been setting GHG targets for our Businesses since 1996 and have a goal to limit our overall emissions to below our

          FY2006 baseline by FY2017. Meeting an absolute target is not easy. Growth across our Businesses will increase emissions and we must continually look for opportunities to improve our energy efficiency and implement GHG reduction projects to mitigate this increase. all our Businesses are required to minimise their emissions to reduce our contribution to climate change. they must identify, evaluate and implement all suitable projects that prevent or minimise GHG emissions including in project design and equipment selection. For further information on our GHG emissions reduction projects, please refer to the Sustainability report 2014.

          Adaptation

          We recognise that we must ensure our business is resilient and can adapt to physical climate change impacts that will occur.

          our assets are long-lived so we take a robust, risk-based approach to managing these impacts. our assessment of the regional impacts on our Businesses shows that they are already exposed to risks

          as a result of climate change, including increasing storm intensities, greater water supply variability and an increasing number of

          high-temperature days. these impacts can affect health and safety, productivity and financial performance. testing the resilience of our operations to these impacts has already changed the way we work. For example, the identification and assessment of increasing storm intensity and storm surge levels has resulted in raising the height of the trestle at our Hay Point coal port facility in australia as part of our expansion plans.

          We continue to look for enhancements to the Company-wide integrated planning framework to allow better assessment

          of the physical risks associated with climate change and to ensure resilience is embedded into our business plans and investment decisions. We will also look for opportunities to work in partnership to improve community and ecosystem resilience to the impacts

          of climate change.

          Investing in technology and innovation

          to effectively address the challenge of climate change, there must be a significant focus on developing and deploying low-emissions technologies over the next few decades. the rate of technology improvement and subsequent adoption must be faster than the usual commercial timeframes if these technologies are to be available at scale and at acceptable cost to meet the global challenge. industry and government will need to work together

          in collaborative partnerships to facilitate this step-change.

          We are a foundation member of the Cooperative research Centre for Greenhouse Gas technologies, one of the world’s leading collaborative research organisations focused on carbon capture and storage (CCS). We contribute a voluntary levy to the australian Coal association low emissions technologies to facilitate the

          development of low-emissions technologies from coal use, including CCS. We are a member of the Global Carbon Capture and Storage institute which aims to accelerate the development, demonstration and deployment of CCS globally through knowledge sharing,

          fact-based advice and advocacy and works to create favourable conditions to implement CCS.

          We are developing a more integrated approach to low-emissions technology to provide a roadmap for our investments. We will investigate opportunities for investment across a range of technologies that have the potential to lead to material emission reductions in our operations and across our supply chains.

          to accelerate deployment of any prospective technologies, we will seek opportunities to partner with governments, industry leaders and key researchers.

          image Further information on our approach to climate change is available online at image


        2. Health and safety

    Keeping our people and operations safe

    We recognise that the health and safety of our people comes first. this is core to Our Charter and to every aspect of our business. our people are key to our long-term success and central to improving our HSeC performance.

    to understand, manage and, where possible, eliminate the risks

    in our business, we have appropriate controls in place and provide our people with appropriate training. While eliminating hazards through engineering or physical controls has a strong place in safety management, we understand it is only part of the solution.

    our operations are required to have systems in place to identify and effectively manage foreseeable crises and emergencies. this ensures our operations can deal with potential causalities, to limit harm and to safely return to full function as soon as possible.

    across our business, we undertake annual assessments to verify that critical controls are effective in managing each material risk. During FY2014, we maintained this focus, which included assessing whether the critical controls were being deployed as designed and to the standard required.

    in FY2014, there were no fatalities reported at our operated assets. our total recordable injury frequency (triF) performance of 4.2 injuries per million hours worked improved by nine per cent compared with FY2013.

    Total recordable injury frequency (per million hours worked)


    Year ended 30 June 2014

    2013

    2012

    total recordable injury frequency (triF) 4.2

    4.6

    4.7

    Focusing on the health of our people

    to prevent occupational illness and injury, we are focused on ensuring the work our people are required to do does not impact their health and that they are fit for work. this means identifying and assessing risks and managing and minimising their impact.

    Since FY2012, we have seen an increase in the reporting of musculoskeletal illnesses and in FY2014 we have also seen an increase in noise induced hearing loss case reporting. these changes in reported cases have been driven by the adoption of comprehensive musculoskeletal illness classification processes and the introduction of programs for the early detection of hearing loss at some of our australian operations. this has resulted in more focus on both of these illnesses.

    in FY2014, the incidence of employee occupational illness was

    2.84 per million hours worked, an increase of 19 per cent compared with FY2013.

    Employee occupational illness incidence (per million hours worked)

    image

    image

    Year ended 30 June 2014 2013 2012

    Musculoskeletal

    1.61

    1.24

    1.04

    other illnesses

    0.55

    0.64

    0.35

    noise induced hearing loss 0.68 0.51 0.97

    Total 2.84 2.39 2.36

    image

    our priority is to control occupational exposures at their source.

    We are focused on continuously improving our occupational exposure controls. in situations where we cannot control the source, we employ a range of measures, including the provision of personal protective equipment to safeguard our people.

    operations are required to identify and control health risks and to establish an exposure risk profile to harmful agents for employees and for contractors and to review the profile to validate exposure levels and to account for process changes. the implementation

    of exposure controls is required where exposure potentially exceeds or is anticipated to exceed occupational exposure limits (oels).

    We establish our own oels when we believe local regulatory limits do not provide adequate protection for our workers. if a potential exposure to harmful agents exceeds 50 per cent of the oel, periodic medical surveillance is required.

        1. Health and safety continued

          in FY2012, we established a health target baseline and committed to reduce potential occupational exposure to carcinogens and airborne contaminants by 10 per cent by FY2017. in FY2014,

          we recorded a 22 per cent decrease in the number of potential exposures to carcinogens and airborne contaminants, if not for the use of personal protective equipment, compared with our FY2012 baseline. We have therefore currently exceeded our target; however, exposure control remains an area of focus

          to ensure our reductions are maintained.

        2. Environment

    We demonstrate environmental responsibility by minimising

    our environmental impacts and contributing to enduring benefits to biodiversity, ecosystems and other environmental resources.

    We classify environmental incidents based on our risk Severity table. We determine a significant environmental incident as one that causes one or more major impacts to land, biodiversity, ecosystem services, water resources or air, with effects lasting greater than one year. incidents that may impact any of the environmental attributes listed previously are investigated and remediated according to internal

    or external requirements. in FY2014, there were no significant environmental incidents reported at our operated assets.

    Energy and greenhouse gas management

    We strive to continually improve energy and GHG management. Consistent with our Environment GlD, our Businesses are required to identify, evaluate and implement suitable projects that prevent or minimise GHG emissions. We also evaluate and implement GHG emission reduction opportunities in capital project design.

    in FY2013, we set a target to maintain our FY2017 GHG emissions below our FY2006 baseline levels, while continuing to grow

    our business. in FY2014, the Group’s total GHG emissions were

    45.0 million tonnes (Mt) of carbon dioxide equivalent (Co2-e),

    a reduction of 1.7 Mt Co2-e compared with FY2013 (46.7 Mt Co2-e). this keeps us in line to achieve our GHG target. We will continue

    to focus on the implementation of abatement opportunities within our Businesses to further reduce our GHG emissions.

    GHG Scope 1 and 2 (millions of tonnes CO2-e)

    image

    image

    Year ended 30 June 2014 2013 2012

    Scope 1(a) 22.7 22.0 20.2

    Scope 2 (b) 22.3 24.7 20.0

    image

    total GHG millions of tonnes Co2-e 45.0 46.7 40.2

    1. Scope 1 refers to direct GHG emissions from our operated assets.

    2. Scope 2 refers to indirect GHG emissions from the generation of purchased electricity and steam that is consumed by our operated assets.


    in FY2014, our total energy consumption across the Group increased by six per cent, compared to FY2013, to 343 petajoules. this increase was related to new projects coming online, including our Jimblebar iron ore mine in Western australia and our Daunia coal mine in Queensland, australia. to further improve energy consumption and GHG emissions we have implemented projects across our Businesses.

    in line with requirements of the uK Companies act 2006, our reported FY2014 GHG intensity was 4.9 tonnes of Co2-e per tonne of copper equivalent production. We believe that attempting to benchmark energy use and/or greenhouse gas emissions on an intensity basis does not meaningfully contribute to an understanding of our performance, given the diverse range of products across our portfolio, fundamental differences in the grade, geology, accessibility and technological processes and changes in output levels that routinely occur in different directions in response to changing market conditions and other factors. rather than use an intensity metric, we have set ourselves a more challenging goal to limit our overall emissions by setting an absolute target, keeping our FY2017 GHG emissions below our FY2006 baseline while we continue to grow our business.


    Biodiversity and land management

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    1

    Strategic Report

    improving our management of land and enhancing biodiversity are essential to operating in a responsible and sustainable manner. We continue to demonstrate environmental responsibility by minimising our environmental impacts and seeking opportunities to contribute to enduring benefits to biodiversity, ecosystems

    and other environmental resources.

    image

    2

    our assets

    our approach to land access is undertaken on a case-by-case basis and considers the potential environmental, societal, economic or cultural impacts. We consider what land we need for our activities and seek to identify the uses of the land and the stakeholders who may be affected by our activities. We then look at our possible short-term and long-term impacts on that land, including the effects that our use may have on biodiversity, water resources, air and communities.

    in FY2013, we established a target to develop and maintain land and biodiversity management plans that include controls to avoid, minimise, rehabilitate and apply compensatory actions as appropriate, to manage the biodiversity and ecosystem impacts of our operations. this target is supported by the requirements

    of our Environment GlD. in FY2014, all our operations developed land and biodiversity management plans, consistent with our target.

    We also have explicit requirements in our Environment GlD

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    3 Corporate Governance Statement

    to avoid environmental impacts to protect our local and global environment. We continue to monitor the operational effectiveness of our controls. Where actual or reasonably foreseeable residual impacts remain to important biodiversity and ecosystems impacted by our activities, we look to undertake compensatory actions.

    in addition to the environmental management actions of our Businesses, we have voluntarily committed to finance the conservation and ongoing management of areas of high biodiversity and ecosystem value that are of national or international conservation significance. We established an alliance with Conservation international to support the delivery of this target and improve

    our approach to biodiversity management more broadly. as a result, we will improve our environmental performance and broaden

    our contributions to lasting environmental benefits beyond what could be achieved by our operations alone. as of FY2014, we have committed more than uS$30 million to conservation, in addition to the environmental management activities at our operations.

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    4

    Remuneration Report

    a central part of our approach to managing our impacts on land and biodiversity is the rehabilitation of land no longer required for our activities. our Businesses are required to maintain rehabilitation plans that support life of asset and closure plans, and to rehabilitate disturbed areas no longer required for operational purposes, consistent with the pre-disturbance

    land use or alternate land use, taking into account regulatory requirements and stakeholder expectations.

    Water stewardship

    We recognise the role we have as responsible stewards of the water resources we share with our host communities and the environment. the sustainability of our operations relies on our ability to obtain

    an appropriate quality and quantity of water, use it responsibly and manage it appropriately, including taking account of natural supply variations.

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    5

    Directors’ Report

    across our Businesses, water risks are required to be assessed and managed on a regional basis. in some locations, we operate

    in arid environments where water scarcity is an ongoing challenge, while in other locations, we contend with water excess, water quality or water discharge issues. We anticipate climate change is likely to make the patterns and cycles of water flow less predictable and so we require our operations to implement adaptive responses. Managing our shared water resources is therefore a complex task for our business.



        1. Environment continued

          in line with our Environment GlD, our operations are required

          to assess direct, indirect and cumulative impacts and risks to water resources as a result of understanding social, cultural, ecological and economic values of these resources at a catchment level within our area of influence. Based on these risks and impacts, controls demonstrating application of the mitigation hierarchy (avoid, minimise and rehabilitate environmental impacts prior to applying compensatory actions) are required to be implemented and monitored for effectiveness. target environmental outcomes

          for impacts to water resources consistent with the level of risk are also required. Compensatory actions are applied where residual impacts remain to important water-related biodiversity and ecosystems impacted by our activities to meet our

          target environmental outcomes and contribute to long-term environmental benefits.

          recognising the regional nature of our water risks, we introduced a target in FY2013 requiring our Businesses with water-related material risks, to implement projects to improve the management of water resources. the target allows our Businesses to focus

          on the water challenges specific to the regions in which they operate. in FY2014, all our operations that identified water-related material risks implemented at least one project to improve the management of associated water resources.

          Being a responsible water steward requires transparent and consistent reporting of water use and impacts. We have played

          a key role in the development and implementation of the Minerals Council of australia’s Water accounting Framework (WaF). the WaF aims to improve data integrity and comparability across the sector to allow a more meaningful analysis on which to base policy making and deliver improved outcomes. our water reporting is consistent with the WaF approach, and we are working with the iCMM to support broader adoption across industry.

          under the WaF, water is categorised as type 1 (close to drinking water standards), type 2 (suitable for some purposes), and type 3 (unsuitable for most purposes). in FY2014, our total water input (water intended for use) was 347,700 megalitres across the Group, with 84 per cent defined as type 2 or type 3. our use of type 2 and type 3 water demonstrates our approach to utilising lower-quality water wherever feasible.

          Responsibly managing hydraulic fracturing

          the nature of our hydraulic fracturing operations at our north american eagle Ford, Permian, Haynesville and Fayetteville shale areas means at times we work in close proximity to our host communities. We actively engage with local stakeholders to address public concerns about hydraulic fracturing fluids, groundwater contamination, land and water resources, GHG emissions, increased vehicular traffic and worker exposure to respirable crystalline silica. We continue to investigate ways to reduce or eliminate any potential impacts associated with our activities.

          to protect and manage the land and water resources, we conduct environmental assessments prior to the execution of hydraulic fracturing work to minimise the impacts of our operations. in FY2014, we completed a water balance showing inputs, uses, losses, reuse and recycle, and disposal amounts of fresh water for each operation to identify opportunities to reduce water consumption in our hydraulic fracturing operations. We are pursuing non-potable water options, including the use of brackish water, recycled municipal effluents and recycled water from our production wells.


          a number of controls are used to manage, minimise and recycle drilling residuals. We use closed loop systems that allow drilling muds to be recycled and lower the potential for contact with the environment. as part of our commitment to transparency,

          we publicly report the ingredients of the fracturing fluids for each well completion in the hydraulic fracturing chemical disclosure registry, FracFocus. For a high percentage of our wells, we fully disclose all of the ingredients and additives by name (and Chemical abstracts Service number) and provide the maximum percentage of each ingredient present in the fracturing fluid mixture. in a few

          cases, the service providers who supply the ingredients and conduct our well completions elect to designate a small number of proprietary ingredients as confidential business information. in the Permian area, we pump a blend of produced water and fresh water treated with an advanced oxidation process which utilises ozone, a highly reactive oxidant that kills most bacteria. this process eliminates

          the need for clay stabiliser and biocide, thereby reducing the number of additives in the fracturing fluid mixture. every well we drill is checked against our critical controls to ensure well integrity and the safety of our operations.

          the majority of our air emissions relate to GHG emissions from fuel combustion and flaring or venting during well construction and production. We are working to reduce emissions by capturing and selling produced natural gas that may otherwise have been vented or flared.

        2. Society

    Supporting and engaging with our communities

    We are a global company that values our host communities.

    We strive to be part of the communities in which we operate and through all our interactions seek to foster meaningful long-term relationships, which respect local cultures and create lasting benefits. our contribution to our host communities is broad ranging. through employment, taxes and royalties, we support local, regional and national economies. We purchase local goods and services and develop infrastructure that benefits entire communities.

    From the earliest possible stage of a project’s life, we seek to build trust with our stakeholders. By defining the boundaries of our host communities, we assess the social, economic, political, security and environmental aspects and develop a social baseline, which

    is required to be updated every five years with changes tracked over time. Stakeholder engagement plans, which identify the interests and relationships of our stakeholders and contain a range

    of culturally and socially inclusive engagement activities to encourage open communication, are reviewed and updated annually. to ensure our engagement and community development activities are effective and to inform planning activities, our operations are required

    to complete a community perception survey every three years.

    Free prior and informed consent

    as one of the 22 member companies of the iCMM, we have worked to develop a progressive position statement on indigenous Peoples and Mining. this statement, which comes into effect

    in May 2015, specifically addresses the issue of Free Prior and informed Consent (FPiC).

    1.14.5 Society continued

    FPiC is a concept based on good faith negotiation through which indigenous peoples can give or withhold their consent

    using processes consistent with their traditional decision-making practices. Supporting commitments address understanding their rights and interests, building cross-cultural understanding, and agreeing on appropriate engagement processes and participation in decision-making. a number of related commitments address how iCMM members should engage where government is responsible

    for managing indigenous peoples’ interests and how to move forward when differences of opinion arise. the iCMM’s position statement recognises the right of governments to ultimately make decisions

    on development of resources and that, in most countries, neither indigenous peoples nor other groups have a right to veto projects. Where consent cannot be reached, a host government may decide to proceed with a project after balancing the rights and interests of indigenous peoples with the wider population. in these circumstances, it will be up to iCMM member companies

    to determine whether they remain involved with the project.

    through our Community GlD, we require our Businesses to prepare, design and implement indigenous engagement programs that are consistent with the new iCMM Position Statement on indigenous Peoples and Mining for new operations or major capital projects that are located on lands traditionally owned by or under customary use of indigenous peoples and are likely to have significant adverse impacts on indigenous peoples.

    Respecting customary rights

    at a very early stage in a project, we seek to identify landowners, occupiers and users who may be affected by our activities. Knowing who is connected to and uses the land is critical to establishing

    an effective community consultation and engagement program. this helps to ensure people potentially affected by our operations are fully aware of our activities and have an opportunity to express their concerns and aspirations. arising from this engagement, the operational work plan may be amended to reduce potential impacts on landowners and users.

    Surveys are commissioned to identify the customary owners and how the land is being used to ensure these uses are taken into account in our development plans. in instances where land may be used for customary purposes and no formal land title has been issued, information is requested from relevant organisations,

    including government authorities with responsibilities for customary land uses and indigenous peoples’ representative organisations, such as land and tribal councils. Further enquiries are also made directly with the people in the area to help identify those with connections

    to the land.

    Respecting and including Indigenous communities

    We recognise the traditional rights and values of indigenous peoples, respect their cultural heritage and provide opportunities for inclusion and advancement.

    Many of our operations are located on or near indigenous lands.

    We support our workers by providing cultural awareness and competency training for employees and contractors who engage with indigenous peoples from our host communities. training is developed and delivered in consultation with traditional owners. We also identify who is connected to and uses the land to ensure we establish effective community consultation and engagement programs.


    Respecting human rights

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    1

    Strategic Report

    We acknowledge our activities have the potential to impact human rights and we address these through our core business practices.

    We are committed to operating in accordance with the united nations (un) universal Declaration of Human rights, un Guiding Principles on Business and Human rights and the un Global Compact Principles.

    We support these commitments through Our Charter and Code of Business Conduct, and the performance requirements detailed in our GlDs.

    image

    2

    our assets

    in line with our Community GlD, our human rights due diligence process requires our operations to identify and document key potential human rights risks by completing a human rights impact assessment (Hria). this includes assessing performance against the articles of the un universal Declaration of Human rights,

    the un Global Compact principles and host country legislation governing human rights issues. We require each Hria to be reviewed on an annual basis. every three years, each Hria is required to be verified through an engagement process with stakeholders and,

    in medium and high-risk jurisdictions, by a qualified human rights specialist. Where a Hria identifies a material risk, a human rights management plan is required to be implemented and reviewed annually. Selected employees and contractors receive training

    on how to comply with our human rights commitments.

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    3 Corporate Governance Statement

    through our commitment to the Voluntary Principles on Security and Human rights (VPs), we seek to protect people and property from material risks presented by security threats. Performance requirements related to the VPs are implemented through our Security and Emergency Management GlD. our operations are required to identify security-related material risks to people and property and engage relevant stakeholders to develop and manage security programs that respect human rights and fundamental freedoms.

    in addition, we require our operations to conduct a gap analysis annually using the VP’s implementation Guidance tool and

    to implement an improvement plan to close identified gaps.

    the process also provides an opportunity to further build awareness and understanding of the VPs across the Company.

    Making a positive contribution to society

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    4

    Remuneration Report

    Creating lasting economic and social benefit for our communities is fundamental to our business. this helps create a diversified local economy and ensures our investment continues to benefit the community beyond the life of our operations. We are an active participant in industry and sustainable development forums, such

    as the iCMM. We seek to understand our socio-economic impact on local communities and host regions through our participation in the iCMM’s Mining: Partnerships for Development initiative. this global initiative builds on the iCMM’s resource endowment initiative and seeks to enhance mining’s contribution to development and poverty reduction through multi-stakeholder partnerships.

    Wherever we operate, we contribute taxes and royalties to governments which, in turn are used to provide important public services and amenities to their communities. at many of our locations, we also develop infrastructure to support our operations

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    2

    our assets

    in accordance with international Financial reporting Standards (iFrS), we are required to include information regarding the nature of the estimates and judgements and potential impacts on our financial results or financial position in the Financial Statements. this information can be found in note 1 ‘accounting policies’ to the Financial Statements.

        1. Operating results

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    3 Corporate Governance Statement

    the following table describes the approximate impact of the principal factors that affected underlying eBit for FY2014 and FY2013.



    Year ended 30 June

    2014

    US$M

    2013

    uS$M

    Underlying EBIT as reported in the prior year

    22,930

    28,086

    Change in volumes:



    Productivity

    962

    1,257

    Growth

    1,929

    707


    2,891

    1,964

    net price impact:



    Change in sales prices

    (3,396)

    (8,454)

    Price-linked costs

    (80)

    582


    (3,476)

    (7,872)

    Change in controllable cash costs:



    operating cash costs

    1,524

    1,556

    exploration and business development

    398

    949


    1,922

    2,505

    Change in other costs:



    exchange rates

    1,760

    229

    inflation on costs

    (805)

    (646)

    Fuel and energy

    (46)

    (133)

    non-cash

    (2,091)

    154

    one-off items

    (103)


    (1,182)

    (499)

    asset sales

    53

    (66)

    Ceased and sold operations

    (492)

    (657)

    other

    215

    (531)

    Underlying EBIT

    22,861

    22,930

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    4

    Remuneration Report

    5

    Directors’ Report

    the total increase in underlying eBit relating to productivity initiatives in FY2014 was uS$2.9 billion. the following table reconciles the principal factors shown above with the Group’s benefits attributable to productivity initiatives.



    Year ended 30 June

    2014

    US$M

    2013

    uS$M

    Change in operating cash costs

    1,524

    1,556

    Change in exploration and business development

    398

    949

    Change in controllable cash costs

    1,922

    2,505

    Change in volumes attributed to productivity

    962

    1,257

    total productivity gains in underlying eBit

    2,884

    3,762

    Change in capitalised exploration

    10

    545

    Total benefits attributable to productivity initiatives

    2,894

    4,307

    image



    1.15.3 Operating results continued

    the method of calculation of the factors that affected underlying eBit and the Financial Statement line items of revenue, other income and expenses (excluding net finance costs) that are affected by the factors are as follows.


    image

    image

    Factor affecting Underlying EBIT Method of calculation Financial statement line item affected

    Volumes – Growth Volume – Growth comprises underlying eBit for operations that are new or

    image

    acquired in the current period minus underlying eBit for operations that are new or acquired in the corresponding period, change in volumes for operations identified as a Growth project from the corresponding period to the current period multiplied by the prior year underlying eBit margin, and change in volume for Petroleum Business from the corresponding period to the current period multiplied by the prior year underlying eBit margin.

    Volumes – Productivity Change in volumes for each operation not included in the Growth category

    image

    from the corresponding period to the current period multiplied by the prior year underlying eBit margin.

    Change in sales prices Change in average realised price for each operation from the corresponding

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    period to the current period multiplied by current period volumes.

    Price-linked costs Change in price-linked costs for each operation from the corresponding period

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    to the current period multiplied by current period volumes.

    operating cash costs Change in total costs, other than price-linked costs, exchange rates, inflation

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    on costs, fuel and energy costs, non-cash costs and one-off items as defined below for each operation from the corresponding period to the current period.

    revenue and expenses


    revenue and expenses


    revenue expenses expenses

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    exploration and business development

    exploration and business development expense in the current period minus exploration and business development expense in the corresponding period.

    expenses

    exchange rates Change in exchange rate multiplied by current period local currency revenue and expenses. the majority of the Group’s selling prices are denominated

    image

    in uS dollars and so there is little impact of exchange rate changes on revenue.

    image

    inflation on costs Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold operations and expenses in new and acquired operations.

    Fuel and energy Fuel and energy expense in the current period minus fuel and energy expense in the corresponding period.

    revenue and expenses


    expenses


    expenses


    image

    image

    non-cash includes non-cash items, mainly depreciation, amortisation and impairments. expenses

    image

    one-off items Change in costs exceeding a predetermined threshold associated with an unexpected event that had not occurred in the last two years and is not reasonably likely to occur within the next two years.

    image

    asset sales Profit/loss on the sale of assets or operations in the current period minus profit/loss on sale in the corresponding period.

    Ceased and sold operations underlying eBit for operations that are ceased or sold operations in the

    current period minus underlying eBit for operations that are ceased or sold in the corresponding period.

    expenses


    other income


    revenue, other income and expenses


    image

    other Variances not explained by the above factors. expenses

    image


    a reconciliation of the movements in underlying eBit for FY2014 to the financial statement line items in the income Statement is included in section 2.5.

    the following commentary describes the principal factors outlined in the table above for FY2014 and FY2013.

    Volumes

    Volume efficiencies attributed to productivity and the ramp-up of major projects underpinned an increase in production in a number of Businesses in FY2014 and an additional uS$2.9 billion in underlying eBit. Waio was the major contributor as the ramp-up of the Jimblebar mining hub and a series of productivity initiatives raised the capacity of our integrated supply chain and supported a uS$1.8 billion increase in underlying eBit. Despite the impact

    of natural field decline, stronger volumes in our Petroleum Business generated an additional uS$994 million of underlying eBit, reflecting 73 per cent growth in onshore uS liquids volumes

    and a near doubling of production at atlantis.

    Prices

    lower average prices reduced underlying eBit by uS$3.4 billion in FY2014.

    in metallurgical coal, an increase in seaborne supply and the resilience of higher cost, along with uneconomic capacity led to a 20 per cent and 14 per cent decline in the average realised price of hard coking coal and weak coking coal, respectively. the average price received for thermal coal also declined by 14 per cent during the period.

    in total, lower average realised prices in our Coal Business reduced underlying eBit by uS$1.5 billion.

    a five per cent decline in the average realised price of copper reflected the near-term rebalancing of the market, while the acceleration of low-cost, seaborne iron ore supply growth, predominantly from australia’s Pilbara region, weighed on prices in the June 2014 half year. in total, lower average realised prices for copper and iron ore reduced underlying eBit by uS$1.4 billion.

    nickel and aluminium prices rallied towards the end of FY2014

    but remained lower on average for the period, reducing underlying eBit by a further uS$258 million.

    the value of diversification was again evident as higher average realised prices for our petroleum products increased underlying eBit by uS$219 million. in this context, the average price achieved for our natural gas sales book, covering domestic and international markets, increased by 16 per cent.

    Price-linked costs decreased underlying eBit by uS$80 million during the period, primarily reflecting higher royalty charges in our Petroleum and iron ore Businesses.

    1.15.3 Operating results continued

    Controllable cash costs

    a broad-based improvement in productivity underpinned a decrease in controllable cash costs of uS$1.9 billion during the period, being a decrease in operating cash costs of uS$1.5 billion and a decrease in exploration and business development costs of uS$398 million.

    Operating cash costs

    the Group’s commitment to further improve the competitive position of its assets delivered tangible results in FY2014 as operating cash costs declined by uS$1.5 billion. a general increase in labour and contractor productivity had the greatest impact, increasing underlying eBit by uS$1.3 billion.

    an improvement in equipment productivity increased underlying eBit by a further uS$268 million as contract stripping activities were further optimised at Queensland Coal. a reduction in consumable costs in our aluminium, Manganese and nickel Business more than accounted for a uS$33 million decrease in Group supply costs.

    Exploration and business development

    the Group’s exploration expenditure declined by 25 per cent in FY2014 to uS$1.0 billion as we sharpened our focus on greenfield copper porphyry targets in Chile and Peru, and high-impact liquids opportunities in the Gulf of Mexico, Western australia and trinidad and tobago. the associated reduction in the Group’s exploration expense increased underlying eBit by uS$331 million, while a further decline in business development expenditure increased underlying eBit by uS$67 million.

    Other costs

    Exchange rates

    a stronger uS dollar increased underlying eBit by uS$1.8 billion and included the restatement of monetary items in the balance sheet, which reduced underlying eBit by uS$352 million. average and closing exchange rates for FY2014 and FY2013 are detailed

    in note 1 ‘accounting policies’ to the Financial Statements.

    Inflation on costs

    inflation had an unfavourable impact on all Businesses and reduced underlying eBit by uS$805 million during FY2014. this was most notable in australia, Chile and South africa, which accounted for over 85 per cent of the total variance.

    Non-cash

    an increase in non-cash charges reduced underlying eBit by uS$2.1 billion during the period.

    a uS$631 million increase in the depreciation and amortisation charge at onshore uS reflected the ramp-up of liquids production and the progressive development of our Permian acreage. We continue to expect the depreciation rate in the Permian to normalise at a lower level as reserves are booked and the production rate grows towards 100 Mboe per day over the medium term. the completion and progressive ramp-up of several major projects in our iron ore and Coal Businesses resulted in an uS$871 million increase in the depreciation and amortisation expense during the period.


    Depreciation and amortisation expense included the following impairment charges: a uS$292 million charge at energy Coal South africa; a uS$184 million charge related to minor Gulf

    image

    1

    Strategic Report

    of Mexico assets; and a uS$68 million charge associated with our decision to allow the exclusivity agreement for terminal 5 at the Port of Vancouver (united States) to lapse.

    a uS$300 million charge related to the revision of mine site rehabilitation provisions for the Group’s north american closed mines and a lower capitalisation rate for deferred stripping

    at escondida and Pampa norte also contributed to the increase in non-cash charges.

    Asset sales

    image

    2

    our assets

    the divestment of liverpool Bay more than accounted for the uS$53 million increase in underlying eBit related to asset sales.

    Ceased and sold operations

    underlying eBit from ceased and sold operations decreased by uS$492 million in FY2014 and largely reflected: a uS$143 million negative adjustment to the Browse divestment price; the closure of the nickel West leinster Perseverance underground mine

    in november 2013; and the cessation of aluminium smelting activities at Bayside in June 2014.

    Other

    other items increased underlying eBit by uS$215 million and largely reflected an increase in margins at our equity accounted investments and an uS$84 million profit related to the sale of

    image

    3 Corporate Governance Statement

    the energy Coal South africa optimum Coal purchase agreement. a uS$112 million uK pension plan expense in our Petroleum Business is also reported in this category.

    Net finance costs

    net finance costs of uS$1.2 billion decreased by uS$100 million from the prior period. this was primarily related to a decrease of uS$245 million in net interest expenses, which was partially offset by a decrease in interest capitalised of uS$108 million.

    Taxation expense

    total taxation expense, including royalty-related taxation, exceptional items and exchange rate movements, was uS$7.0 billion, representing a statutory effective tax rate of 31.5 per cent (30 June 2013:

      1. per cent).

        image

        4

        Remuneration Report

        Government imposed royalty arrangements calculated by reference to profits are reported as royalty-related taxation. the Minerals resource rent tax (Mrrt) reduced taxation expense by uS$238 million in FY2014 (30 June 2013: increase of uS$321 million) as royalty-related credits in the Coal Business more than offset iron ore Mrrt expense for the period. this included the remeasurement of deferred

        tax assets associated with the Mrrt which decreased taxation expense by uS$170 million in the period (30 June 2013: increase of uS$207 million).

        5

        Directors’ Report

        the Group’s adjusted effective tax rate, which excludes the influence of exchange rate movements, remeasurement of deferred tax assets associated with the Mrrt and exceptional items, was 32.5 per cent (30 June 2013: 34.2 per cent).



        image



        1.15.3 Operating results continued

        adjusted effective tax rate is not an iFrS measure and is reconciled to the statutory effective tax rate below:




        2014




        2013


        Profit

        Income tax



        Profit

        income tax


        before tax

        expense



        before tax

        expense


        Year ended 30 June

        US$M

        US$M

        %


        uS$M

        uS$M

        %

        Statutory effective tax rate

        22,236

        (7,012)

        31.5


        19,726

        (6,906)

        35.0

        less:








        exchange rate movements

        (24)



        245


        remeasurement of deferred tax assets








        associated with the Mrrt

        (170)


        207


        exceptional items

        (551)

        166


        1,928

        (943)


        Adjusted effective tax rate

        21,685

        (7,040)

        32.5

        21,654

        (7,397)

        34.2

        other royalty and excise arrangements that are not profit based are recognised as operating costs within Profit before taxation. these amounted to uS$2.8 billion during the period (30 June 2013: uS$2.6 billion).

        Exceptional items



        Gross

        Tax

        Net

        Year ended 30 June 2014

        US$M

        US$M

        US$M

        Sale of Pinto Valley

        551

        (166)

        385


        551

        (166)

        385

        on 11 october 2013, BHP Billiton completed the sale of its Pinto Valley mining operation for a cash consideration of uS$653 million, after working capital adjustments. a gain on sale of uS$385 million (after tax expense) was recognised in FY2014.

        refer to note 3 ‘exceptional items’ to the Financial Statements for more information.



        Gross

        tax

        net

        Year ended 30 June 2013

        uS$M

        uS$M

        uS$M

        exceptional items by category




        Sale of Yeelirrie uranium deposit

        420

        420

        Sale of richards Bay Minerals

        1,212

        (183)

        1,029

        Sale of diamonds business

        (97)

        (42)

        (139)

        Sale of east and West Browse Joint Ventures

        1,539

        (188)

        1,351

        impairment of nickel West assets

        (1,698)

        454

        (1,244)

        impairment of Worsley assets

        (2,190)

        559

        (1,631)

        impairment of Permian Basin assets

        (266)

        99

        (167)

        other impairments arising from capital project review

        (1,006)

        291

        (715)

        newcastle steelworks rehabilitation

        158

        (47)

        111


        (1,928)

        943

        (985)

        the Group announced the sale of its wholly owned Yeelirrie uranium deposit resulting in a gain on sale of uS$420 million, while the associated tax expense was offset by the recognition of deferred tax benefits on available tax losses.

        the Group announced it had completed the sale of its 37.76 per cent effective interest in richards Bay Minerals resulting in a gain on sale of uS$1.0 billion (after tax expense).

        the Group announced the sale of its diamonds business, comprising its interests in the eKati Diamond Mine and Diamond Marketing operations. the transaction was completed on 10 april 2013 for an aggregate cash consideration of uS$553 million (after adjustments). an impairment charge of uS$139 million (after tax expense) was recognised based on the final consideration.

        the Group signed a definitive agreement to sell its 8.33 per cent interest in the east Browse Joint Venture and 20 per cent interest in the West Browse Joint Venture resulting in a gain on sale of uS$1.5 billion being recognised in FY2013. the associated tax expense of uS$462 million was partly offset by the recognition of deferred tax benefits on available tax losses of uS$241 million and the derecognition of deferred tax liabilities of uS$33 million. the final sales price was determined during FY2014 requiring a loss of uS$143 million recognised in FY2014.

        image

        1

        Strategic Report

            1. Operating results continued

              as a result of expected continued strength in the australian dollar and weak nickel prices, the Group recognised an impairment charge of uS$1.2 billion (after tax benefit) at nickel West in FY2013.

              the Group recognised an impairment of assets at Worsley as a result of expected continued strength in the australian dollar and weak alumina prices. a total impairment charge of uS$1.6 billion (after tax benefit) was recognised.

              an impairment charge of uS$167 million (after tax benefit) was recognised as the performance of specific evaluation wells in certain areas of the Permian Basin (united States) did not support economic development.

              in FY2013, Waio refocused its attention on the capital efficient expansion opportunity that exists within the Port Hedland inner harbour, and all early works associated with the outer harbour development option were suspended. this revision to the Waio development sequence and the change in status of other minor capital projects across the Group resulted in the recognition of impairment charges of uS$639 million (after tax benefit) and other restructuring costs of uS$76 million (after tax benefit) in FY2013, of which uS$580 million (after tax benefit) were related to Waio.

              image

              2

              our assets

              the Group recognised a decrease of uS$158 million (before tax expense) to its rehabilitation obligations in respect of former operations at the newcastle steelworks (australia). this followed the completion of the Hunter river remediation Project and reaching agreement with the environment Protection authority in March 2013 regarding the necessary scope of work to repeal the environmental Classification at Steel river.

              exceptional items during FY2013 are classified by nature as follows:



              Year ended 30 June 2013 uS$M


              Sale of assets

              impairment of goodwill and other

              assets


              restructuring

              costs

              Closure and rehabilitation provisions released


              Gross

              Sale of Yeelirrie uranium deposit

              420

              420

              Sale of richards Bay Minerals

              1,212

              1,212

              Sale of diamonds business

              (97)

              (97)

              Sale of east and West Browse Joint Ventures

              1,539

              1,539

              impairment of nickel West assets

              (1,698)

              (1,698)

              impairment of Worsley assets

              (2,190)

              (2,190)

              impairment of Permian Basin assets

              (266)

              (266)

              other impairments arising from capital project review

              (898)

              (108)

              (1,006)

              newcastle steelworks rehabilitation

              158

              158


              3,171

              (5,149)

              (108)

              158

              (1,928)

              image

              3 Corporate Governance Statement

              refer to note 3 ‘exceptional items’ to the Financial Statements for more information.

              Third party sales

              We differentiate sales of our production from sales of third party products due to the significant difference in profit margin earned on these sales. the table below shows the breakdown between our production and third party products.


              image

              image

              4

              Remuneration Report

              Year ended 30 June (1)

              US$M

              uS$M

              uS$M

              Group production




              revenue

              64,227

              63,067

              66,969

              related operating costs

              (41,410)

              (40,264)

              (39,017)

              underlying eBit

              22,817

              22,803

              27,952

              underlying eBit Margin

              35.5%

              36.2%

              41.7%

              Third party products




              revenue

              2,979

              2,886

              3,508

              related operating costs

              (2,935)

              (2,759)

              (3,374)

              operating profit

              44

              127

              134

              Margin on third party products (2)

              1.5%

              4.4%

              3.8%

              2014 2013 2012


              1. excluding exceptional items.

                image

                5

                Directors’ Report

              2. operating profit divided by revenue.

              We engage in third party trading for the following reasons:

              • Production variability and occasional shortfalls from our own assets means that we sometimes source third party materials to ensure a steady supply of product to our customers.

              • to optimise our supply chain outcomes, we may buy physical product from third parties.

              • in order to support the development of liquid markets, we will sometimes source third party physical product and manage risk through both the physical and financial markets.



            2. Cash flow analysis

              a Consolidated Cash Flow Statement is contained in the Financial Statements. the explanatory notes appear in note 23 ‘notes to the consolidated cash flow statement’ to the Financial Statements. a summary table has been presented below to show the key sources and uses of cash.



              Year ended 30 June

              2014

              US$M

              2013

              uS$M

              2012

              uS$M

              Cash generated from operations

              31,384

              28,793

              32,987

              Dividends received

              1,284

              721

              722

              net interest paid

              (839)

              (786)

              (412)

              taxation paid

              (6,465)

              (8,574)

              (8,038)

              Net operating cash flows

              25,364

              20,154

              25,259

              Purchases of property plant and equipment

              (15,993)

              (22,243)

              (18,637)

              exploration expenditure

              (1,010)

              (1,351)

              (2,493)

              exploration expenditure expensed and included in operating cash flows

              716

              1,047

              1,644

              Purchases of intangibles

              (192)

              (400)

              (219)

              investment in financial assets

              (1,193)

              (475)

              (471)

              investment in subsidiaries, operations and jointly controlled entities

              (12,556)

              investment in equity accounted investments

              (44)

              (84)

              (83)

              net proceeds from investing activities

              1,882

              4,780

              330

              Net investing cash flows

              (15,834)

              (18,726)

              (32,485)

              net proceeds (repayment of)/from interest bearing liabilities

              (910)

              7,157

              8,644

              Share buy-back

              (83)

              Dividends paid

              (6,639)

              (7,004)

              (6,220)

              Contribution from non-controlling interest

              1,435

              73

              101

              other financing activities

              (354)

              (424)

              (403)

              Net financing cash flows

              (6,468)

              (198)

              2,039

              Net increase/(decrease) in cash and cash equivalents

              3,062

              1,230

              (5,187)

              net operating cash flows after interest and tax increased by 26 per cent to uS$25.4 billion in FY2014. a uS$2.6 billion increase in cash generated from operations (after changes in working capital balances) and a uS$2.1 billion decrease in net taxes paid were the major contributors to the strong increase. the decrease in net taxes paid was attributed to lower income tax payments in the year of uS$1.2 billion in line with our lower effective tax rate and income tax refunds of uS$852 million.

              net investing cash outflows decreased by uS$2.9 billion to uS$15.8 billion during the period. this reflected a uS$6.6 billion reduction in capital and exploration expenditure partially offset by a decline in proceeds from asset sales of uS$2.9 billion. expenditure on major growth projects totalled uS$13.1 billion, including uS$5.6 billion on petroleum projects and uS$7.5 billion on minerals projects. Sustaining capital expenditure and other items totalled uS$2.9 billion. exploration expenditure was uS$1.0 billion, including uS$716 million classified within net operating cash flows.

              net financing cash flows included the proceeds from interest bearing liabilities of uS$6.3 billion and contributions from non-controlling interests of uS$1.4 billion. Proceeds from interest bearing liabilities included the issuance of a four tranche Global Bond of uS$5.0 billion. these inflows were more than offset by debt repayments of uS$7.2 billion and dividend payments to our shareholders of uS$6.4 billion.

              image

              1

              Strategic Report

            3. Net debt and sources of liquidity

              our policies on debt and treasury management are as follows:

              • a commitment to a solid ‘a’ credit rating;

              • gearing to be a maximum of 40 per cent;

              • diversification of funding sources;

              • generally to maintain borrowings and excess cash in uS dollars.

    Gearing and net debt

    net debt, comprising interest bearing liabilities less Cash and cash equivalents, was uS$25.8 billion, which represented a decrease of uS$1.7 billion compared with the net debt position at 30 June 2013. Gearing, which is the ratio of net debt to net debt plus net assets, was 23.2 per cent at 30 June 2014 compared with 26.8 per cent at 30 June 2013.

    Cash at bank and in hand less overdrafts at 30 June 2014 was uS$8.8 billion compared with uS$5.7 billion at 30 June 2013. included within this were short-term deposits at 30 June 2014 of uS$7.1 billion compared with uS$3.2 billion at 30 June 2013.

    image

    2

    our assets

    Funding sources

    During FY2014, the Group issued a four tranche Global Bond totalling uS$5.0 billion comprising uS$500 million Senior Floating rate notes due 2016 paying interest at three-month uS dollar liBor plus 25 basis points, uS$500 million 2.050 per cent Senior notes due 2018, uS$1.5 billion 3.850 per cent Senior notes due 2023, and uS$2.5 billion 5.000 per cent Senior notes due 2043.

    none of our Group level borrowing facilities are subject to financial covenants. Certain specific financing facilities in relation to specific Businesses are the subject of financial covenants that vary from facility to facility, but which would be considered normal for such facilities.

    image

    3 Corporate Governance Statement

    our maturity profile for uS dollar bonds, euro bonds and australian dollar bonds for the following five years is set out below.



    Year ended 30 June


    2015

    US$M

    2016

    US$M

    2017

    US$M

    2018

    US$M

    2019

    US$M

    uSD Bonds


    3,825

    1,050

    3,250

    2,250

    euro Bonds


    1,365

    1,706

    auD Bonds


    939



    3,825

    2,415

    3,250

    939

    3,956









    Facility available


    Used


    Unused

    Facility available


    used


    unused


    2014

    2014

    2014

    2013

    2013

    2013


    US$M

    US$M

    US$M

    uS$M

    uS$M

    uS$M

    Commercial paper program (1)

    6,000

    6,000

    6,000

    (1,330)

    4,670

    total financing facilities

    6,000

    6,000

    6,000

    (1,330)

    4,670

    (1) the Group has a uS$6.0 billion commercial paper program backed by uS$6.0 billion of revolving credit facilities. in May 2014, the uS$5.0 and uS$1.0 billion revolving credit facilities expiring in December 2015 and December 2014, were replaced by a uS$6.0 billion revolving credit facility. the new facility has a five-year maturity with two one-year extension options. the facility is used for general corporate purposes and as backup for the commercial paper programs. the interest rates under

    these facilities are based on an interbank rate plus a margin. the applicable margin is typical for a credit facility extended to a company with the Group’s credit rating. the Group had no uS commercial paper outstanding in the market at the end of the financial year (2013: uS$1.3 billion).

    image

    4

    Remuneration Report

    additional information regarding the maturity profile of our debt obligations and details of our standby and support agreements is included in note 29 ‘Financial risk management’ to the Financial Statements.

    5

    Directors’ Report

    the Group’s credit ratings are currently a1/P-1 (Moody’s – long-term/short-term) and a+/a-1 (Standard & Poor’s – long-term/short-term). the ratings outlook from both agencies did not change during FY2014.



    image



        1. Other information

    Quantitative and qualitative disclosures about market risk

    We identified our primary market risks in section 1.15.1 of this Annual Report. A description of how we manage our market risks, including both quantitative and qualitative information about our market risk sensitive instruments outstanding at 30 June 2014, is contained in note 29 ‘Financial risk management’ to the Financial Statements.

    Off-balance sheet arrangements and contractual commitments information in relation to our material off-balance sheet arrangements, principally contingent liabilities, commitments

    for capital expenditure and commitments under leases at 30 June 2014 is provided in note 21 ‘Contingent liabilities’ and note 22 ‘Commitments’ to the Financial Statements.

    Subsidiary information

    information about our significant subsidiaries is included in note 26 ‘Subsidiaries’ to the Financial Statements.

    Related party transactions

    Related party transactions are outlined in note 32 ‘Related party transactions’ to the Financial Statements.

    Significant changes since the end of the year

    Significant changes since the end of the year are outlined in note 36 ‘Subsequent events’ to the Financial Statements.

    image

    the Strategic Report is made in accordance with a resolution of the Board.


    Jac Nasser AO

    Chairman

    Dated: 11 September 2014

    image

    2 Our assets

    image

    image

    1

    Strategic Report

    2.1 Business overview


    2.1.1 Petroleum and Potash Business

    Our Petroleum and Potash Business headquartered in Houston, United States, comprises conventional and non-conventional operations located in six countries throughout the world and

    a potash project based in Saskatchewan, Canada.

    image

    Petroleum

    Our Petroleum Business includes exploration, development, production and marketing activities. We have a high-quality resource base concentrated in the United States and Australia.

    image

    2

    Our assets

    Our core production operations are primarily located in the US Gulf of Mexico, Onshore US and in Australia. We also have operations in Trinidad and Tobago, Pakistan, Algeria and the United Kingdom. We produce crude oil and condensate, natural gas and natural gas liquids (NGLs).

    The Petroleum portfolio consisted of conventional oil and gas operations up until 2011, when we moved into the unconventional shale business. Our Onshore US operations evolved from the acquisition of the Fayetteville shale assets from Chesapeake Energy Corporation and the acquisition of Petrohawk Energy Corporation.

    Our overall production for FY2014 was 246.0 million barrels

    of oil equivalent (MMboe). This was mainly attributable to our US and Australian operations, which produced 144.3 MMboe

    image

    3 Corporate Governance Statement

    and 80.0 MMboe, respectively, with the majority of US production coming from Onshore US, which produced 108.1 MMboe. Operations outside Australia and the United States delivered the remaining production volumes. Information relating to our oil and gas reserves is set out in section 2.3.1.

    4

    Remuneration Report

    5

    Directors’ Report

    In line with our aim of simplification and a sharper strategic focus, we continue to evaluate our existing portfolio in order to optimise our position around our core business.


    image


    image



    image

    Fayetteville

    Arkansas

    2.1.1 Petroleum and Potash Business continued



    Oklahoma


    New Mexico



    Haynesville


    Texas


    Permian

    Houston


    Eagle Ford

    Louisiana

    Shenzi


    Shale reservoirs are characterised by low permeability, so it is necessary to stimulate the reservoir to create additional permeability and, therefore, the flow of liquids and gas to the wellbore. Extracting oil and gas from shale involves hydraulic fracturing, which is a process developed to efficiently access supplies of oil and natural gas locked inside dense subsurface rock formations, such as shale. Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation

    Mississippi

    to allow the well to produce commercial volumes.

    The development phase of an onshore shale operation requires an extensive drilling and completion program, which may include

    N

    associated gas compression and treatment facilities and connecting

    Neptune

    Atlantis Mad Dog


    image

    image

    Liquids-focused area Gas-focused area

    Gulf of Mexico

    pipelines. Shale development has a repetitive, manufacturing-like nature that provides opportunities for increased efficiency. Much of our development of the shale reservoirs utilises horizontal drilling, with average lateral lengths between 1,400 and 1,700 metres. We enter into service contracts with third parties to provide drilling and completion services at our operated sites. At the end of FY2014,

    image

    we had 24 drilling rigs in operation.


    Our production operations include the following:

    United States

    Gulf of Mexico

    We operate two fields in the Gulf of Mexico (Shenzi with a 44 per cent interest and Neptune with a 35 per cent interest)

    and hold non-operating interests in three other fields (Atlantis with a 44 per cent interest, Mad Dog with a 23.9 per cent interest, and Genesis with a 4.95 per cent interest). We have ongoing infill drilling in our Gulf of Mexico fields. We completed water injection

    development projects at Shenzi and Atlantis in CY2013. All the fields are located between 155 and 210 kilometres offshore of the US state of Louisiana. We also own 25 per cent and 22 per cent, respectively, of the companies that own and operate the Caesar oil pipeline and the Cleopatra gas pipeline. These pipelines transport oil and gas from the Green Canyon area, where all our Gulf of Mexico fields

    are located, to connecting pipelines that transport product onshore. Our US oil production is delivered to refineries along the Gulf Coast of the United States.

    Onshore US

    We produce oil, condensate, NGLs and natural gas in four shale areas: Eagle Ford, Permian, Haynesville and Fayetteville. The Eagle Ford area has two sections, Black Hawk and Hawkville. Our combined leasehold acreage onshore in the United States is approximately 1.2 million net acres. Our ownership interests in those leases range from less than one per cent to 100 per cent. At 30 June 2014, we held an interest

    in approximately 7,700 gross wells and approximately 2,600 net wells.

    We acted as joint venture operator for approximately 32 per cent of our gross wells. Production in FY2014 was 108.1 MMboe up from

    99.2 MMboe in FY2013.

    During FY2014, we sold our interest in our Onshore US South Midland shale operation, located in the Permian Basin, to EP Energy for cash consideration of US$153 million.

    Much of the Eagle Ford and Permian areas are focused on hydrocarbon liquids. The Eagle Ford area is located in south Texas, where our leasehold acreage comprises 0.3 million net

    acres. The Permian area is located in west Texas, where our leasehold acreage currently comprises 0.2 million net acres following the sale of our South Midland interest and other leasehold acquisitions and disposals. Production volume from the Permian area was 3.8 MMboe. The combined production in FY2014 from our liquids-focused Eagle Ford and Permian areas was 51.9 MMboe, up from 33.4 MMboe

    in FY2013, with a production mix of 42 per cent crude oil and condensate (FY2013: 35 per cent), 36 per cent natural gas (FY2013: 42 per cent) and 22 per cent NGLs (FY2013: 23 per cent).

    The Haynesville and Fayetteville areas are focused on natural gas. The Haynesville area is located in northwest Louisiana and east Texas, where our leasehold acreage comprises 0.3 million net acres. The Fayetteville field is located in north central Arkansas, where our leasehold acreage comprises 0.4 million net acres. The Haynesville and Fayetteville areas had combined production in FY2014 of

    56.2 MMboe of natural gas (FY2013: 65.8 MMboe).

    Oil and gas production from our onshore shale areas is sold domestically in the United States, via connections to intrastate and interstate pipelines. Prices for oil, NGLs and natural gas are based on US regional price indices, including West Texas Intermediate prices for oil, Henry Hub prices for natural gas and Mont Belvieu prices for NGLs.

    Dampier

    Tallaganda

    LNG Plant

    North West Shelf

    Scarborough

    2.1.1 Petroleum and Potash Business continued


    Thebe


    Jupiter



    Stybarrow

    Pyrenees

    Macedon

    Onslow

    Macedon Gas Plant


    Lakes Entrance

    Victoria

    Snapper

    Longford

    Barracoutta


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    Tuna Turrum Kipper

    Flounder Halibut

    1

    Strategic Report

    Australia


    Bream



    Kingfish

    Blackback

    Bass Strait

    0 10 20 30km

    BHP Billiton acreage Gas Fields

    Oil Fields


    Karratha

    Australia

    Bass Strait

    Together with our 50–50 joint venture partner, Esso Australia (a subsidiary of ExxonMobil), through the Gippsland Basin Joint

    Venture, we participated in the original discovery of hydrocarbons in 1965 and we have been producing oil and gas from Bass Strait for more than 40 years. The Bass Strait operations are located between 25 and 80 kilometres off the southeastern coast of Australia.

    We sell the majority of our Bass Strait crude oil and condensate production to refineries along the east coast of Australia under

    12-month term contracts. The contract price is based on the average Dated Brent price. Gas is piped onshore to the joint venture’s Longford processing facility, from which we sell our share of production to domestic distributors under contracts with periodic price reviews.

    Minerva

    We are the operator of Minerva (90 per cent interest), a gas field located 11 kilometres south-southwest of Port Campbell in western Victoria. The operation consists of two subsea wells, with gas piped onshore to a processing plant. After processing the gas is delivered into a pipeline and sold domestically under long-term contracts.

    North West Shelf

    We are a joint venture participant in the North West Shelf Project, located approximately 125 kilometres northwest of Dampier in Western Australia. The North West Shelf Project was developed in phases: the domestic gas phase supplies gas to the Western Australian domestic market, mainly under long-term contracts, and a series of liquefied natural gas (LNG) expansion phases supplying LNG to buyers in Japan, South Korea and China under a series of long-term contracts.

    We continue to expand our operations in North West Shelf. The North rankin compression project was completed during FY2014 to recover remaining lower pressure gas from the North rankin and Perseus gas fields. North rankin B platform was constructed adjacent

    to the existing North rankin A platform connected by a 100-metre long bridge and operates as a single facility.

    Gas from North West Shelf is piped to the Karratha Gas Plant for processing. Liquefied petroleum gas (LPG), condensate and LNG

    are transported to market by ship, while domestic gas is transported by the Natural Gas and Pilbara Energy pipelines. We are also a joint venture partner in four nearby oil fields – Cossack, Wanaea, Lambert and Hermes. All North West Shelf gas and oil joint ventures are operated by Woodside.

    Pyrenees

    We operate six oil fields in Pyrenees, which are located offshore approximately 23 kilometres northwest of Northwest Cape, Western Australia. We had an effective 62 per cent interest in the fields as at 30 June 2014, based on inception-to-date production from two

    permits in which we have interests of 71.43 per cent and 40 per cent, respectively. The project uses a floating, production, storage and

    off-take (FPSO) facility. The crude oil produced is sold internationally on the spot market.


    Macedon

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    2

    Our assets

    We are the operator of Macedon (71.43 per cent interest), an offshore gas field located approximately 75 kilometres west of Onslow, Western Australia, and a gas processing facility onshore, approximately 17 kilometres southwest of Onslow. The operation achieved first gas in August 2013 and consists of four subsea wells, with gas piped onshore to the processing plant. After processing, the gas is delivered into a pipeline and sold domestically under long-term contracts.

    Stybarrow

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    3 Corporate Governance Statement

    We are the operator of Stybarrow (50 per cent interest), an oil field located 55 kilometres west-northwest of Exmouth, Western Australia. The project uses a FPSO facility. The crude oil produced is sold internationally on the spot market.

    Other production operations

    Algeria

    Our Algerian operations comprise a 38 per cent interest in the rOD Integrated Development, which consists of six satellite oil fields that pump oil back to a dedicated processing train. The oil is sold on a spot basis to international markets. Our interest in rOD

    is subject to a contractual determination with our joint venture partner ENI, which could result in a future change in our interest under certain conditions.

    United Kingdom

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    4

    Remuneration Report

    We hold a 16 per cent non-operating interest in the Bruce oil and gas field in the North Sea and operate the Keith oil and gas field (31.83 per cent interest), a subsea tie-back, which is processed via the Bruce platform facilities.

    We divested our interest in Liverpool Bay (46.1 per cent interest) on 31 March 2014 to ENI ULX Limited for a cash consideration of US$29.1 million (subject to finalisation) and the transfer of the rehabilitation and restoration liability to the buyer. Liverpool Bay

    was an integrated development consisting of five producing offshore oil and gas fields in the Irish Sea, the Point of Ayr onshore processing plant in northern Wales and associated infrastructure.

    Trinidad and Tobago

    image

    We operate the Greater Angostura field (45 per cent interest in the production sharing contract), an integrated oil and gas development, located offshore, 40 kilometres east of Trinidad. The crude oil is

    5

    Directors’ Report

    sold on a spot basis to international markets, while the gas is sold domestically under term contracts. During FY2014, we extended the termination date of our Production Sharing Contract with the Government of Trinidad and Tobago from 2021 to 2026.

    Pakistan

    We operate the Zamzama gas project (38.5 per cent interest) in the Sindh province of Pakistan. Both gas and condensate are sold domestically under term contracts in accordance with the Pakistan Government’s pricing policies.



    Information on Petroleum operations

    image

    The following table contains additional details of our production operations. This table should be read in conjunction with the production (refer to section 2.2.1) and reserve tables (refer to section 2.3.1).

    Operation

    & location Product Ownership Operator

    Title, leases or options

    Nominal production capacity

    Facilities, use & condition


    United States

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    Neptune (Green Canyon 613)

    Offshore deepwater Gulf of Mexico (1,300m)

    Oil and gas

    BHP Billiton 35%

    Marathon Oil 30%

    Woodside Energy 20% Maxus US Exploration 15%

    BHP Billiton

    Lease from US Government as long

    as oil and gas produced in paying quantities

    50 Mbbl/d oil

    50 MMcf/d gas

    Permanently moored tension leg platform (TLP)

    Shenzi (Green Canyon 653)

    Offshore deepwater Gulf of Mexico (1,310m)

    Oil and gas

    BHP Billiton 44%

    Hess Corporation 28%

    repsol 28%

    BHP Billiton

    Lease from US Government as long

    as oil and gas produced in paying quantities

    100 Mbbl/d oil

    50 MMcf/d gas

    Stand-alone TLP

    Genghis Khan field (part of same geological structure) tied back to Marco Polo TLP

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    Atlantis (Green Canyon 743)

    Offshore deepwater Gulf of Mexico (2,155m)

    Oil and gas BHP Billiton 44% BP 56%

    BP Lease from US Government as long

    as oil and gas produced in paying quantities

    200 Mbbl/d oil

    180 MMcf/d gas

    Permanently moored

    semi-submersible platform


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    Mad Dog (Green Canyon 782)

    Offshore deepwater Gulf of Mexico (1,310m)

    Oil and gas BHP Billiton 23.9% BP 60.5%

    Chevron 15.6%

    BP Lease from US Government as long

    as oil and gas produced in paying quantities

    80 Mbbl/d oil

    60 MMcf/d gas

    Permanently moored integrated truss spar, facilities for simultaneous production and drilling operations

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    Genesis (Green Canyon 205)

    Offshore deepwater Oil and gas BHP Billiton 4.95%


    Chevron Lease from US


    55 Mbbl/d oil


    Floating cylindrical

    Gulf of Mexico (approximately 790m)

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    Onshore US

    Eagle Ford,

    Chevron 56.67%

    ExxonMobil 38.38%


    Oil, condensate, gas BHP Billiton working


    BHP Billiton

    Government as long

    as oil and gas produced in paying quantities


    We currently own

    72 MMcf/d gas


    Average daily

    hull (spar) moored to seabed with integrated drilling facilities


    Eagle Ford – producing

    south Texas

    and NGL

    interest in leases range

    operated

    leasehold interests

    production

    oil and gas wells and

    Permian,

    from <1% to 100%

    approximately in approximately

    during FY2014

    associated pipeline and

    west Texas

    BHP Billiton average

    32% of

    1.2 million net acres:

    1,230 MMcf/d gas

    compression facilities

    Haynesville,

    net working interest

    approximately Eagle Ford –

    60.1 Mbbl/d oil and

    Permian – oil and gas wells

    northern Louisiana and east Texas Fayetteville,

    Arkansas

    is approximately 34% Largest partners include Southwestern Energy, XTO, Devon Energy

    7,700 wells

    0.3 million acres Permian –

      1. million acres

        Haynesville –

      2. million acres Fayetteville –

      3. million acres

    Other – 0.1 million acres Leases associated with producing wells remain

    in place as long as oil

    and gas is produced in paying quantities

    condensate

    31.3 Mbbl/d NGL

    with associated gathering systems, processing plant and compression facilities

    Haynesville – producing gas wells with a third party operated pipeline network

    Fayetteville – producing gas wells with associated pipeline and compression infrastructure

    All production from Onshore US fields is transported

    to various intrastate and interstate pipelines through multiple interconnects


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    Information on Petroleum operations continued

    Operation

    & location Product Ownership Operator


    Title, leases or options


    Nominal production capacity


    image

    1

    Strategic Report

    Facilities, use & condition

    Australia



    Minerva

    Offshore and


    Esso Australia (Exxon Mobil subsidiary) 50% Oil Basins Ltd 2.5%

    royalty interest in

    19 production licences Kipper Unit Joint Venture (KUJV):

    BHP Billiton 32.5%

    Esso Australia 32.5% Santos Offshore

    Pty Ltd 35%


    Gas and condensate BHP Billiton 90%

    Government

    Bass Strait







    Offshore and onshore Victoria

    Oil and gas

    Gippsland Basin Joint Venture (GBJV):

    BHP Billiton 50%

    Esso Australia

    20 production licences and 2 retention leases issued by Australian

    200 Mbbl/d oil

    1,075 MMcf/d gas

    5,150 tpd LPG

    20 producing fields with 23 offshore developments (15 steel jacket platforms,

    Expire between 2016 and end of life of field

    One production licence held with Santos Ltd


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    BHP Billiton Production licence issued

    850 tpd ethane


    150 TJ/d gas

    4 subsea developments, 2 steel gravity based mono towers, 2 concrete gravity based platforms)

    Onshore infrastructure:


    2 well completions

    onshore Victoria


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    3 Corporate Governance Statement

    North West Shelf

    Santos (BOL) 10%

    by Australian Government 600 bbl/d condensate expires 5 years after

    production ceases

    Single flow line transports gas to onshore gas processing facility

    Gas plant located approximately 4 km inland from Port Campbell

    Offshore

    Domestic gas,

    North West Shelf Project is Woodside

    9 production licences

    North rankin Complex:

    Production from

    and onshore Western Australia North rankin

    Goodwyn

    Perseus Angel and

    Searipple fields


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    North West Shelf

    LPG, condensate, LNG

    an unincorporated JV BHP Billiton:

    8.33% of original domestic

    gas JV, will ultimately increase to 16.67%

    16.67% of Incremental Pipeline Gas (IPG) domestic gas JV 16.67% of original LNG JV 12.5% of China LNG JV 16.67% of LPG JV

    Other participants: subsidiaries of Woodside, Chevron, BP, Shell, Mitsubishi/Mitsui and China National Offshore Oil Corporation

    Petroleum Ltd

    issued by Australian Government

    6 expire in 2022 and

    1. expire 5 years from end of production

      2,500 MMcf/d gas

      60 Mbbl/d condensate Goodwyn A platform: 1,450 MMcf/d gas

      110 Mbbl/d condensate

      Angel platform: 960 MMcf/d gas

      50 Mbbl/d condensate Withnell Bay gas plant: 600 MMcf/d gas

      5-train LNG plant: 45,000 tpd LNG

      North rankin and Perseus processed through the interconnected North rankin A and North rankin B platforms

      Production from Goodwyn and Searipple processed through Goodwyn A platform

    2. subsea wells in Perseus field tied into Goodwyn A platform

    Production from Angel field processed through Angel platform

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    4

    Remuneration Report

    Onshore gas treatment plant at Withnell Bay processes gas for domestic market

    5-train LNG plant

    Offshore

    Western Australia Wanaea

    Cossack

    Lambert and Hermes fields

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    Pyrenees

    Oil BHP Billiton 16.67% Woodside 33.34%, BP, Chevron, Japan

    Australia LNG (MIMI)

    16.67% each

    Woodside Petroleum Ltd

    3 production licences issued by Australian Government expire in 2014 (currently

    in renewal), 2018 and 2033, respectively

    Production: 60 Mbbl/d

    Storage: 1 MMbbl

    Floating production storage and off-take (FPSO) unit

    Offshore

    Oil WA-42-L permit:

    BHP Billiton Production licence issued

    Production:

    24 subsea well completions

    Western Australia

    BHP Billiton 71.43%

    by Australian Government 96 Mbbl/d oil

    (19 producers, 4 water

    Crosby Moondyne Wild Bull

    Tanglehead Stickle and ravensworth fields


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    Macedon

    Offshore and

    Apache PVG 28.57% WA-43-L permit: BHP Billiton 40%

    Apache APG Permits 31.5%

    Inpex Alpha 28.5%


    Gas and condensate WA-42-L permit

    expires 5 years after production ceases


    BHP Billiton Production licence issued

    Storage: 920 Mbbl


    Production:

    injectors, 1 gas injector), FPSO


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    5

    Directors’ Report

    4 well completions

    onshore

    BHP Billiton 71.43%

    by Australian Government 200 MMcf/d gas

    Single flow line transports

    Western Australia


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    Stybarrow

    Offshore

    Apache PVG 28.57%


    Oil and gas BHP Billiton 50%

    expires 5 years after production ceases


    BHP Billiton Production licence issued

    20bbl/d condensate


    Production:

    gas to onshore gas processing facility Gas plant located

    approximately 17 km

    southwest of Onslow


    10 subsea well completions

    Western Australia

    Woodside 50%

    by Australian Government 80 Mbbl/d oil

    (6 producers, 3 water

    Stybarrow and Eskdale fields

    expires 5 years after production ceases

    Storage: 900 Mbbl

    injectors, 1gas injector) Gas production is reinjected


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    Information on Petroleum operations continued

    Operation

    & location Product Ownership Operator


    Title, leases or options


    Nominal production capacity


    Facilities, use & condition

    Other production operations

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    Algeria ROD Integrated Development

    Onshore Berkine

    Basin, 900 km southeast of Algiers, Algeria

    Oil BHP Billiton 45% interest

    in 401a/402a production sharing contract

    ENI 55%

    BHP Billiton effective 38% interest in rOD unitised integrated development ENI 62%

    Joint

    Sonatrach/ENI entity

    Production sharing

    contract with Sonatrach (title holder)

    Expires in 2016 with option for two 5-year extensions under certain conditions specified

    in the contracts

    Approximately

    80 Mbbl/d oil

    Development and production

    of 6 oil fields

    2 largest fields (rOD and SFNE) extend into neighbouring blocks 403a, 403d

    Production through dedicated processing train on block 403

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    United Kingdom Bruce/Keith

    Offshore

    North Sea, UK


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    Liverpool Bay

    Oil and gas Bruce:

    BHP Billiton 16%

    BP 37%

    Total SA 43.25%

    Marubeni 3.75% Keith:

    BHP Billiton 31.83%

    BP 34.84%

    Total SA 25%

    Marubeni 8.33%

    Bruce – BP

    Keith – BHP Billiton

    3 production licences

    issued by UK Government expire in 2015, 2018

    and 2046

    920 MMcf/d gas Integrated oil and

    gas platform

    Keith developed as

    tie-back to Bruce facilities

    Offshore northwest Oil and gas BHP Billiton 46.1%

    BHP Billiton 3 production licences

    308 MMcf/d gas

    Integrated development

    England, Irish Sea

    ENI 53.9%

    issued by UK Government 70 Mbbl/d oil

    of 5 producing fields

    Douglas and Douglas West oil fields

    Lennox, Hamilton, Hamilton North gas fields

    BHP Billiton’s interest

    in Liverpool Bay divested 31 March 2014

    expire in 2016, 2025

    and 2027

    and condensate

    Oil treated at Douglas complex then piped to oil storage barge for export by tankers

    Gas processed at Douglas complex then piped

    by subsea pipeline

    to Point of Ayr gas terminal for further processing

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    Trinidad and Tobago Greater Angostura

    Offshore Trinidad

    Oil and gas BHP Billiton 45%

    BHP Billiton Production sharing

    100 Mbbl/d oil

    Integrated oil and gas

    and Tobago

    National Gas Company 30%

    Chaoyang 25%

    contract with the Trinidad 280 MMcf/d gas and Tobago Government

    entitles us to operate Greater Angostura until 2026

    development: central processing platform connected to the Kairi-2 platform and gas export platform with 3 satellite wellhead protector platforms and flow lines

    Oil pipeline from processing platform to storage and export at Guayaguayare

    Gas supplied to Trinidad and Tobago domestic markets

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    Pakistan Zamzama

    Onshore

    Sindh Province,

    Gas and condensate BHP Billiton 38.5%

    ENI Pakistan 17.75%

    BHP Billiton 20-year development and 500 MMcf/d gas

    production lease from the 3,350 bbl/d

    10 production wells

    4 process trains

    Pakistan

    PKP Exploration 9.375%

    PKP Exploration 2 9.375%

    Government Holdings 25%

    Pakistan Government expires in 2022 (option to extend 5 years)

    condensate

    2 front end compression trains


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    2.1.1 Petroleum and Potash Business continued

    Capital projects

    United States

    Shenzi Water Injection

    The Shenzi Water Injection program was approved as part of the original sanctioned Shenzi project, which began production in 2009, to supplement aquifer pressure for additional recovery. The program included drilling and completion of three water injection wells and provides facilities to inject up to 125 thousand barrels per day (Mbbl/d) of water at 7,000 pounds per square inch (psi). The final Water Injector well #3 was drilled and completed in August 2013.

    The additional recovery resulting from water injection is expected to be approximately 80 million barrels (gross). Our share of final development costs was approximately US$375 million. We are the operator with a 44 per cent interest and repsol and Hess Corporation each hold a 28 per cent interest.

    Atlantis South Water Injection

    During the initial Atlantis South development, water injection topsides and subsea facilities were approved and installed. The Atlantis South Water Injection project was later approved in January 2009

    to provide pressure support. The water injection project involved the drilling of four subsea water injectors, tying them into the existing infrastructure and commissioning the 75 Mbbl/d of water injection facilities. Project completion took place in June 2013 and our 44 per cent share of the project costs was approximately

    US$242 million. The Atlantis platform is operated by BP and located approximately 190 miles offshore from New Orleans, Louisiana.

    Onshore US

    BHP Billiton’s Onshore US drilling and development investment in FY2014 was US$4.2 billion, down from US$4.7 billion in FY2013, with US$3.6 billion (FY2013: US$3.8 billion) spent in the

    liquids-focused areas of Eagle Ford and Permian, and US$0.6 billion (FY2013: US$0.9 billion) in the gas-focused areas of Haynesville and Fayetteville. The expenditure primarily related to drilling and completion activities at all four areas. Our onshore drilling activity in FY2014 resulted in 413 net development wells completed, primarily in the Eagle Ford and Permian areas.

    Of the US$4.2 billion, approximately US$400 million was spent on the installation of more than 200 kilometres of pipeline infrastructure and additional gas processing facilities, primarily in our Eagle Ford and Permian areas.

    The majority of drilling and completion activity in Onshore US was directed towards the liquids-focused Eagle Ford and Permian areas to capitalise on relatively stronger liquid prices as compared with natural gas prices. At the end of FY2014, more than 85 per cent

    of drilling activity was conducted in these areas.

    Our Onshore US capital investment is expected to remain at approximately US$4.0 billion in FY2015, as we continue to optimise our drilling program. This includes an operated rig count of 26 for the period. Approximately 65 per cent of operated drilling activity will be conducted in our liquids-focused acreage in the Eagle Ford area. The remaining activity will occur in the Haynesville and Permian areas, where we are continuing to evaluate our most prospective acreage. Our operated drilling program in the Fayetteville area remains temporarily suspended; however, we continue to invest

    in wells operated by third parties where we see value.

    Australia

    image

    1

    Strategic Report

    Macedon

    Macedon is a domestic gas development that consists of a 200 million cubic feet per day (MMcf/d) stand-alone gas plant, four subsea production wells, a 90-kilometre 20-inch wet gas

    pipeline and a 67-kilometre 20-inch sales gas pipeline. The project was approved in August 2010 at an investment level of US$1.1 billion (BHP Billiton share). First gas occurred in August 2013 with a final development cost of approximately US$1.2 billion (BHP Billiton share).

    Bass Strait Kipper gas field development

    image

    2

    Our assets

    Initial development of the Kipper gas field in the Gippsland Basin, located offshore Victoria, was approved by the Board in December 2007. A supplemental approval of the development was granted in January 2011. The first phase of the project included two new subsea wells, three new pipelines and platform modifications to supply

    10 Mbbl/d of condensate and 80 MMcf/d of gas. Facilities were completed in September 2012; however, first production did not commence due to the need to provide for mercury removal.

    Gas and liquids will be processed via the existing Gippsland Basin Joint Venture facilities. The Kipper gas field development is

    comprised of the Kipper Unit Joint Venture and the Gippsland Basin Joint Venture. We own a 32.5 per cent interest in the Kipper Unit Joint Venture, with Esso Australia (32.5 per cent) and Santos

    (35 per cent). We own a 50 per cent interest in the Gippsland Basin Joint Venture, with Esso Australia owning the remaining 50 per cent.

    Funding for the installation of the mercury treatment facilities of US$120 million was approved in March 2014 with completion expected to occur in CY2016. Our share of costs incurred to

    image

    3 Corporate Governance Statement

    30 June 2014 was US$25 million.

    Bass Strait Turrum field development

    Further expansion of the Gippsland Basin facilities is underway following approval by the Board in July 2008 of the full field development of the Turrum oil and gas field. A supplemental approval of the development was obtained in January 2011. The project consists of four production and two injection wells and a new platform, Marlin B, linked by a bridge to the existing Marlin A platform.

    The Turrum field, which has a capacity of 11 Mbbl/d of oil and

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    4

    Remuneration Report

    200 MMcf/d of gas, is located 42 kilometres offshore in approximately 60 metres of water. Our share of development costs is approximately US$1.4 billion, of which US$1.3 billion was incurred as of 30 June 2014. The Turrum field development operates under the Gippsland Basin Joint Venture, in which we own a 50 per cent interest, with Esso Australia owning the remaining 50 per cent. Initial production of low carbon dioxide gas through the Turrum facilities occurred in June 2013. High carbon dioxide production from the Turrum reservoir will come online with completion of the Longford Gas Conditioning Plant in CY2016.

    Longford

    The Longford Gas Conditioning Plant (LGCP) Project was approved by the Board in December 2012 to enable the production of Turrum reserves plus the production of Kipper and other undeveloped high carbon dioxide content hydrocarbons. The project scope includes

    a carbon dioxide extraction facility, brownfield tie-ins, an electrical upgrade and multiple supporting utilities. Our share of development costs is approximately US$520 million, of which US$202 million

    image

    was incurred as of 30 June 2014. First gas production is expected in CY2016. Esso Australia is the operator of the LGCP, owning a

    5

    Directors’ Report

    50 per cent interest and BHP Billiton owns the remaining 50 per cent.



    2.1.1 Petroleum and Potash Business continued North West Shelf North Rankin gas compression project The North West Shelf gas compression project was approved by

    the Board in March 2008 to recover remaining lower pressure gas

    from the North rankin and Perseus gas fields. The project consisted of a new gas compression platform, North rankin B, capable of processing 2,500 MMcf/d of gas, which was constructed adjacent to the existing North rankin A platform, 135 kilometres offshore from Karratha on the northwest coast of Western Australia. The two platforms are connected by a 100-metre long bridge and operate as a single facility. Our share of development costs was approximately US$721 million subject to finalisation. First gas production from this site occurred in October 2013. This project is operated by Woodside, with an equally shared interest between Woodside, BHP Billiton,

    BP, Chevron, MIMI and Shell.

    North West Shelf Greater Western Flank–A

    The North West Shelf Greater Western Flank–A (GWF-A) gas project was approved by the Board in November 2011 to recover gas from the near field Goodwyn H and Tidepole fields. The project consists of a five well subsea tie-back of the Goodwyn H and Tidepole

    fields to the Goodwyn A platform. The Goodwyn A platform

    is located in 130 metres of water, approximately 130 kilometres offshore from Karratha on the northwest coast of Australia.

    Our share of development costs is approximately US$400 million, of which US$206 million was incurred as of 30 June 2014. First gas production is expected in CY2016. Woodside is the operator and we own a 16.67 per cent interest.

    Significant evaluation activities

    We perform development evaluation activities to determine the technical feasibility and commercial viability of prospective projects after exploration and appraisal. Our significant recent evaluation activities include the following:

    United States

    Mad Dog Phase 2

    The Mad Dog Phase 2 project is in response to the successful Mad Dog South appraisal well, which confirmed significant hydrocarbons in the southern portion of the Mad Dog field. The project has been sent back to the study phase to re-evaluate the concept. Discussions are ongoing with the operator to potentially modify the development plan. BP is the operator and we hold a 23.9 per cent working interest.

    Stampede (formerly known as Knotty Head)

    We decided, effective April 2014, to withdraw from our 20 per cent non-operated working interest in the Stampede Operating Agreement following the completion of our development planning.

    Australia

    Scarborough

    Development planning for the large Scarborough gas field offshore Western Australia is in progress. We continue to evaluate development options. Esso is the operator of the WA-1-r lease and we hold a 50 per cent working interest. We are the operator and

    have a 100 per cent working interest in the adjacent Thebe discovery and the WA-346-P block.

    North West Shelf Other – Greater Western Flank ‘2’

    Planning continues for the development of Greater Western Flank ‘2’. Greater Western Flank ‘2’ represents the second phase of development of the core Greater Western Flank fields, behind the GWF-A development, and is located to the southwest of the existing Goodwyn A platform. Woodside is the operator and

    we own a 16.67 per cent share.


    Exploration and appraisal

    Our exploration strategy is to focus on material opportunities,

    at high working interest, with a bias for liquids and operatorship. While the majority of our expenditure occurs in our two principal areas of activity, the Gulf of Mexico and Western Australia,

    we also have exploration activities in Trinidad and Tobago, Brazil, South Africa, South East Asia, and Onshore US.

    Access

    In FY2014, we gained access to acreage in Australia, Trinidad and Tobago, Brazil and the Gulf of Mexico region of the United States.

    In Australia, we farmed into Block 480-P, in Western Australia

    (55 per cent working interest and operator; 12,585 square kilometres). In Trinidad and Tobago, we signed a production sharing contract on Block 23b (60 per cent working interest and operator; 2,579 square kilometres) and farmed into Blocks 23a and 14 (70 per cent working interest and operator; 3,597 square kilometres). In Brazil, we signed a contract on two blocks in the Foz do Amazonas (100 per cent working interest and operator; 3,069 square kilometres). In the

    Gulf of Mexico, we were awarded eight blocks (100 per cent working interest and operator; 186 square kilometres) after being the highest bidder on Lease Sale 227, held during the March 2013 quarter.

    Exploration program expenditure details

    In Western Australia, we drilled Bunyip-1 exploration well on Block WA-335P in February 2014 (52.5 per cent working interest and operator). The well discovered gas in the target Triassic Mungaroo section.

    Also in Western Australia, we drilled several near field targets that may be tied back to our existing infrastructure. The first of these, Stybarrow East-1 (50 per cent working interest and operator) was spud in December 2013 and discovered a non-commercial quantity of hydrocarbons. A subsequent sidetrack, Stybarrow East-2, was

    a dry hole. Both wells were plugged and abandoned and costs were expensed. A secondary near field target, rydal-1 (50 per cent working interest and operator) was drilled in January 2014. The well encountered non-commercial hydrocarbons and was subsequently plugged, abandoned and expensed.

    In the Gulf of Mexico, following the discovery of oil in the raptor-1 well in FY2013 (50 per cent working interest, APC operator),

    we participated in a sidetrack, which spud in the June 2013 quarter. The sidetrack failed to find hydrocarbons and the costs associated with both the raptor discovery well and the subsequent sidetrack were expensed as a non-commercial discovery. In the September 2013 quarter, we drilled the Sake exploration well (60 per cent working interest and operator). The well was plugged, abandoned and the costs were expensed in September 2013.

    During FY2014, our gross expenditure on exploration was US$600 million, of which US$369 million was expensed.

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    1

    Strategic Report

    2.1.1 Petroleum and Potash Business continued

    Exploration and appraisal wells drilled or in the process of drilling during the year:

    image

    image

    Well Location Target BHP Billiton equity Spud date Water depth Total well depth Status

    Stybarrow East-1


    image

    image

    Stybarrow East-2

    Carnarvon Basin WA-32-L


    Carnarvon Basin WA-32-L

    Oil 50% (Operator) 10 December 2013 675 metres 2,533 metres Plugged and abandoned

    Hydrocarbons encountered Non-commercial

    Oil 50% (Operator) 26 December 2013 675 metres 2,670 metres Plugged and abandoned

    Dry hole

    rydal-1 Carnarvon Basin WA-255P


    image

    Bunyip-1 Carnarvon Basin WA-335P

    Oil 50% (Operator) 13 January 2014 752 metres 3,268 metres Plugged and abandoned

    Hydrocarbons encountered Non-commercial

    Gas 52.5% (Operator) 4 February 2014 1,187 metres 4,579 metres Plugged and abandoned

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    2

    Our assets

    Hydrocarbons encountered Under evaluation

    raptor-1/ST-1 Gulf of Mexico

    DC535

    Oil 50% (Anadarko Operator)

    28 May 2013 2,490 metres 6,348 metres Plugged and abandoned

    image

    Hydrocarbons encountered Non-commercial

    Sake-2 Gulf of Mexico DC726

    Oil 60% (Operator) 4 August 2013 1,064 metres 5,597 metres Plugged and abandoned

    Dry hole


    image


    In Trinidad and Tobago, we farmed out a 35 per cent interest in Block 5 and 6 to BG International Limited in the June 2014 quarter. We have retained 65 per cent interest and operatorship. Also in

    Drilling

    The number of wells in the process of drilling and/or completion as of 30 June 2014 was as follows:

    Trinidad and Tobago, we commenced acquisition of a 17,719 square

    kilometre 3D seismic survey in the March 2014 quarter over our seven operated deepwater blocks (Blocks 5, 6, 28, 29, 23a, 23b and

    Exploratory wells Development wells Total

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    Gross Net (1) Gross Net (1) Gross Net (1)

    image

    3 Corporate Governance Statement

    14). We expect the survey to be completed in the first half of FY2015.

    In South Africa, we hold the exploration rights to Block 3B/4B, which is located off the country’s west coast. In the September 2013 quarter, we acquired Global Energy Holdings LLC’s 10 per cent interest in the block, bringing our equity in Block 3B/4B to 100 per cent. During the past year we completed the processing of the 10,075 square kilometre 3D seismic survey that was acquired in FY2013. Evaluation of this survey is ongoing.

    In India, we hold interests and operate nine offshore blocks acquired during the NELP VII & VIII licensing rounds. Due to the inability to gain unencumbered access to explore and produce hydrocarbons in these blocks we have notified the government of our intent to exit and

    are currently awaiting government approval. We have retained our 50 per cent non-operated interest (BG operator) in one deepwater block acquired during the NELP IX licensing round. All exploration expenditure to date on India has been expensed.

    In Malaysia, we relinquished our interest in Block Q in the March 2014 quarter. Also in Malaysia, we are planning acquisition of

    a 2,940 square kilometre 3D seismic survey over Block SK-2A. The survey is expected to commence in the first half of FY2015.

    Following a strategic review in the first half of FY2014, we decided to exit the Philippines. In SC55, we have formally reassigned

    5

    Directors’ Report

    our 60 per cent interest and operatorship back to Otto. In SC59, we have reassigned our 75 per cent interest and operatorship to the Philippines National Oil Company (PNOC).

    Australia – – 5 1 5 1

    United States

    – – 397

    183

    397

    183

    Other

    – – 2

    1

    2

    1

    Total

    – – 404

    185

    404

    185

    (1) represents our share of the gross well count.

    Delivery commitments

    We have delivery commitments of natural gas and LNG of approximately 2,353 billion cubic feet through 2031 (74 per cent Australia, seven per cent US and 19 per cent Other) and crude, condensate, and NGL commitments of 15 million barrels through 2018 (55 per cent Australia, 43 per cent United States and

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    4

    Remuneration Report

    two per cent Other). We have sufficient proved reserves and production capacity to fulfil these delivery commitments.

    Primarily as a result of our recent acquisitions and asset purchases in our Onshore US shale asset, we have obligations for contracted capacity on transportation pipelines and gathering systems for which we are the shipper. We have obligations to gather and transport 1,400 billion cubic feet of natural gas and 23 million barrels of oil

    in FY2015. The agreements with the gas gatherers and transporters have annual escalation clauses.



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        1. Petroleum and Potash Business continued

          image

          Potash

          Our Potash strategy is to build a material industry position over the long term.

          We hold exploration permits and mining leases, issued by the Government of Saskatchewan, covering more than 14,000 square kilometres of mineral rights in the province of Saskatchewan

          in Canada. We have progressively explored our permit areas over the past seven years and continue to evaluate their economic development potential. We are converting our exploration permits to long-term lease as these permits mature in order to enable further evaluation. To date, we have secured 4,400 square kilometres under long-term mining leases.

          We continue to progress our Jansen Potash Project, a greenfield potash project, located approximately 140 kilometres east of Saskatoon in south-central Saskatchewan. We believe Jansen

          is the world’s best undeveloped potash resource and is likely to be a low-cost source of supply once fully developed. Investment in Jansen could underpin a potential fifth pillar of BHP Billiton, given the opportunity to develop a multi-decade, multi-mine basin in Saskatchewan.

          On 20 August 2013, we announced an additional US$2.6 billion investment for Jansen, bringing total approved spending to US$3.8 billion. This investment is funding the excavation and lining of the Project’s production and service shafts, and the installation of essential surface infrastructure and utilities.

          The level of expenditure on the Jansen Potash Project in FY2014 was US$596 million, which was lower than the annual instalment of US$800 million previously announced for FY2014. We suspended excavation of the production and service shafts in the December 2013 quarter to enable a thorough review of activities completed and to ensure all learnings were captured and adopted in future works. Shaft excavation resumed in the March 2014 quarter and progressed in a staggered manner to mitigate risk and optimise their development. As at 30 June 2014, the pre-development phase was 30 per cent complete.

          During FY2014, we allowed our exclusivity for Terminal 5 at the Port of Vancouver to lapse. We are currently assessing a range of options to meet our port requirements.

          With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to modulate the pace

          of development as we seek to time our entrance to meet market demand. The introduction of one or more minority partners, consistent with our approach for certain of our other resource operations, will be considered at the appropriate time.

          On the basis of our current projections and assuming Board approval, the Jansen Potash Project is likely to ramp-up to its nameplate capacity of approximately 10 Mtpa of agricultural grade potassium chloride (KCl) in the decade beyond 2020. The Measured resource estimate for Jansen is 5.3 billion tonnes at 25.6 per cent potassium

          oxide (K2O) (25.6 per cent K2O is equivalent to 40.5 per cent KCl using the mineralogical conversion factor of 1.583) with an

          anticipated life of more than 50 years. The Government of Saskatchewan has issued a Potash Lease Special Agreement (KLSA) for our Jansen Project, which provides long-term security of tenure to allow the ongoing development and subsequent operation of Jansen for the life of the operation.

          We are continuing to evaluate other areas for which we have exploration permits in the Saskatchewan potash basin, including Young, Boulder and Melville, through analysis of the extensive data collected from successive exploration programs.

          In 2013, the management of the closed mine sites associated with Base Metals North America was transitioned from the Copper to the Potash Business. All locations are in care and maintenance or in various stages of closure.


        2. Copper Business

    image

    Copper

    Our Copper Business, headquartered in Santiago, Chile, is one of the world’s premier producers of copper, silver, lead and uranium, and is a leading producer of zinc. Our portfolio of mining operations includes the Escondida mine in Chile, the world’s largest single producer of copper, and Olympic Dam in South Australia, a major producer of copper and uranium. Our total copper production in FY2014 was 1.7 million tonnes (Mt). Our concentrate production, which represents 58 per cent of total production, results from flotation of sulphide ores mined at our Escondida and Antamina mines. Oxide ores and sulphide ores amenable to leaching are mined and processed into copper cathode, using conventional

    heap leaching, followed by solvent extraction and electrowinning processes at Escondida, Cerro Colorado and Spence. Copper cathode is also produced at Olympic Dam, where sulphide ores are processed through conventional flotation and the resulting

    concentrate is further transformed into cathodes through a smelting and refining process.

    We market five primary products: copper cathodes, copper, lead and zinc concentrates and uranium oxide. We sell most of our copper cathode production to wire rod mills, brass mills and casting plants around the world under contracts with prices at premiums to the London Metal Exchange (LME) prices. We sell the majority of our uranium oxide to electricity generating utilities, principally in western

    Europe, North America and east Asia. Uranium is typically sold under a mix of long-term and short-term contracts. We sell most of our copper, lead and zinc concentrates to smelters located in diversified geographic markets such as China, South America, Japan, India and South Korea. Treatment charges and refining charges (collectively referred to as TCrCs) are negotiated with counterparties on a variety of tenors. Some of the ores we mine contain quantities of silver and gold, which remain in the base metal concentrates we sell and are typically subject to payment credits. We sell refined silver and gold from Olympic Dam.

    2.1.2 Copper Business continued

    Our five operating assets, which are located in South America and Australia, consist of the following:

    Americas

    Escondida

    Our 57.5 per cent owned and operated Escondida mine is the largest producer of copper in the world. Located in the Atacama Desert in northern Chile, Escondida employs approximately 14,000 operational employees and contractors and has the capacity to move in excess of 1.3 Mt of material per day. Its two open-cut pits feed two concentrator plants, which use grinding and flotation technologies to produce copper concentrate, as well as two leaching operations (oxide and sulphide). In FY2014, our share of Escondida production was 485.7 kilotonnes (kt) of payable copper in concentrate and

    177.1 kt of copper cathode. Escondida has a reserve life of 52 years.

    The availability of key inputs like power and water at competitive prices is an important focus for our Copper Business. In November 2013, we awarded a long-term energy contract to a consortium consisting of Korea Southern Power Co. and Samsung Construction & Trading Corp. for the development and operation of a 517 MW combined-cycle gas-fired power plant in the town of Mejillones, Chile. The plant, which will be connected to the Northern Interconnected Grid (SING), will supply the increasing demand for electricity at our operations, and is expected to reduce our carbon footprint. Construction work commenced in 2014 with commercial operation expected in the second half of CY2016.

    A contract for the supply of natural gas to the Kelar power plant has been finalised, with first deliveries under the supply contract with Gas Natural Fenosa scheduled to commence in 2016, simultaneously with the commissioning and commercial operation of the plant.

    To address limitations on the availability of water, we desalinate sea water and carefully manage our use and reuse of available water. The recently approved Escondida Water Supply (EWS) project, which involves the construction of a second desalination plant, will reduce our reliance on the region’s aquifers and help meet our environmental commitments. The EWS project is expected to be commissioned in 2017.

    Pampa Norte

    Pampa Norte consists of two operations – Spence and Cerro Colorado. Copper cathode is produced at both operations following a leaching, solvent extraction and electrowinning process.

    Our wholly owned Spence copper mine is located in the Atacama Desert, 162 kilometres northeast of Antofagasta in Chile. During FY2014, Spence produced 152.8 kt of high-quality copper cathode, using oxide and sulphide ore treatment through leaching, solvent extraction and electrowinning processes. Spence has a reserve life of 10 years.

    5

    Directors’ Report

    Our wholly owned Cerro Colorado mine, located in the Atacama Desert, 120 kilometres east of Iquique in Chile, remains a significant producer of copper cathode, although production levels have fallen in recent years as grades have declined. Despite this, production in FY2014 reached 80.3 kt of copper cathode. Cerro Colorado has a reserve life of nine years. The extension of the existing environmental and mining licences to continue to enable Cerro Colorado to operate beyond December 2016 is currently pending approval.

    Antamina

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    1

    Strategic Report

    We own 33.75 per cent of Antamina, a large, low-cost copper and zinc mine in north central Peru. Our share of Antamina’s FY2014 production was 143.5 kt of copper in concentrate and 52.0 kt of zinc in concentrate. Antamina also produces molybdenum and lead/bismuth concentrate, as well as small amounts of silver in

    the form of by-products. Antamina has a reserve life of 13 years.

    In FY2013, Antamina completed execution of an expansion project, increasing milling capacity to 130 kilotonnes per day (ktpd). In FY2014, following identification of further milling capacity upside, Antamina commenced execution of a debottlenecking project, to increase milling capacity by 12 per cent to 145 ktpd.

    Australia

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    Cannington

    2

    Our assets

    Our wholly owned Cannington mine is one of the world’s largest producers of silver and lead. Located in northwest Queensland, Australia, the underground mine feeds a beneficiation processing facility that extracts silver/lead and zinc concentrates from sulphide ore. In FY2014, Cannington produced concentrates containing

    186.5 kt of lead, 57.9 kt of zinc and approximately 25.2 million ounces of silver. Cannington has a reserve life of nine years.

    Olympic Dam

    Our wholly owned Olympic Dam mine is a producer of copper cathode and uranium oxide and a refiner of gold and silver bullion.

    The site includes an underground mine, where the primary method of ore extraction is long-hole open stoping with cemented aggregate fill, and an integrated metallurgical processing plant.

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    3 Corporate Governance Statement

    The underground mine extracts copper uranium ore and hauls the ore by an automated train and trucking network feeding underground crushing, storage and ore hoisting facilities. The processing plant consists of two grinding circuits in which high-quality copper concentrate is extracted from sulphide ore through a flotation extraction process. The operation includes a fully integrated metallurgical complex with a grinding and concentrating circuit, hydrometallurgical plant incorporating solvent extraction circuits

    for copper and uranium, a copper smelter, copper refinery and a recovery circuit for precious metals.

    In FY2014, Olympic Dam produced 184.4 kt of copper cathode, 3,988 tonnes of uranium oxide, 121.3 fine kilo-ounces (koz)

    of refined gold and 972 koz of refined silver. Olympic Dam has a reserve life of 47 years.

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    4

    Remuneration Report

    Divested assets – Pinto Valley

    In October 2013, we completed the sale of our Pinto Valley mining operation in the United States and the associated San Manuel Arizona railroad Company to Capstone Mining Corp for US$653 million, after working capital adjustments.

    As a consequence of the sale, and due to their location in North America, the management of 22 closed sites transferred from our Copper Business to our Potash Business. All locations are no longer actively producing and are in care and maintenance or in various stages of closure.


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    Information on Copper mining operations

    The following table contains additional details of our mining operations. This table should be read in conjunction with the production (refer to section 2.2.2) and reserve tables (refer to section 2.3.2).



    Mine type &


    Mine &

    Means



    Title, leases


    mineralisation

    Facilities, use

    location

    of access

    Ownership

    Operator

    or options

    History

    style

    Power source & condition

    Americas

    image

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    Copper Escondida

    Atacama

    Desert, 170 km southeast of Antofagasta, Chile

    Public road

    Copper cathode transported by privately owned rail to ports

    at Antofagasta and Mejillones Copper

    concentrate

    BHP Billiton

    57.5% of Minera Escondida Limitada (MEL)

    rio Tinto 30% JECO Corporation consortium comprising Mitsubishi, JX

    BHP Billiton Mining concession

    from Chilean Government valid indefinitely

    (subject to payment of annual fees)

    Original

    construction completed in 1990

    Sulphide Leach copper production commenced in 2006

    2 open-cut pits:

    Escondida and Escondida Norte Escondida and

    Escondida Norte

    mineral deposits are adjacent but distinct supergene enriched porphyry

    Escondida-

    owned transmission lines connect to Chile’s northern power grid

    Electricity purchased

    2 concentrator

    plants extract copper concentrate from sulphide

    ore by flotation extraction process 2 solvent extraction

    plants produce

    copper cathode

    transported by

    Nippon Mining

    copper deposits

    under contracts Nominal capacity:

    Escondida-owned and Metals 10%

    expiring

    85.6 Mtpa copper

    pipelines to its Coloso port facilities


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    Pampa Norte Spence

    JECO2 Ltd 2.5%

    2016 and 2029

    concentrate (nominal milling capacity) and 330 ktpa copper cathode (nominal capacity of

    tank house) Two 168 km concentrate

    pipelines

    166 km aqueduct Port facilities at Coloso, Antofagasta

    Atacama Desert, 162 km northeast of Antofagasta, Chile

    Public road Copper cathode transported

    by rail to ports

    at Mejillones and Antofagasta

    100% BHP Billiton Mining concession from Chilean Government

    valid indefinitely (subject to payment of annual fees)

    Development cost of US$1.1 billion approved

    in 2004 First copper produced

    Open-cut Enriched and oxidised porphyry

    copper deposit

    that presents dominantly in situ copper

    Spence-owned transmission lines connect to Chile’s northern power grid

    Electricity

    Processing and crushing facilities, separate dynamic (on-off) leach pads, solvent extraction plant,

    electrowinning plant

    in 2006

    oxide mineralisation purchased

    Nominal capacity


    image

    Pampa Norte Cerro Colorado

    that overlies

    a near-horizontal sequence of supergene sulphide, transitional sulphide, and

    image

    lower-most primary (hypogene) sulphide mineralisation

    under contract

    of tank house: 170 ktpa copper cathode

    Atacama Desert, 120 km

    Public road Copper cathode

    100% BHP Billiton Mining concession from Chilean

    Commercial production

    Open-cut Enriched and

    Long-term contracts with

    2 primary, secondary and tertiary

    east of Iquique, trucked to port

    Government

    commenced

    oxidised porphyry

    northern Chile

    crushers, leaching

    Chile

    at Iquique

    valid indefinitely (subject to payment of annual fees)

    in 1994 Expansions in 1996 and 1998

    copper deposit that presents dominantly

    in situ copper

    oxide mineralisation that overlies

    a near-horizontal sequence

    of supergene sulphide, transitional sulphide, and lower-most primary (hypogene) sulphide mineralisation

    power grid

    pads, solvent extraction plant, electrowinning plant

    Nominal capacity of tank house: 86 ktpa copper cathode


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    image

    1

    Strategic Report

    Information on Copper mining operations continued



    Mine type &


    Mine &

    Means


    Title, leases


    mineralisation

    Facilities, use

    location

    of access

    Ownership

    Operator or options

    History

    style

    Power source & condition

    Americas

    Copper and zinc



    Antamina


    Andes

    Public road BHP Billiton

    Compañía

    Mining rights

    Commercial

    Open-cut

    Long-term

    Primary crusher,

    mountain

    Copper and zinc 33.75% of

    Minera

    from Peruvian

    production

    Zoned porphyry

    contracts with

    concentrator, copper

    range,

    270 km north of Lima, north central Peru


    concentrates transported by pipeline to port of Huarmey

    Molybdenum


    Compañía Minera Antamina Antamina SA SA Glencore

    Xstrata 33.75%

    Teck 22.5%


    Government held indefinitely, subject to payment

    of annual fees and supply


    commenced in 2001 Capital cost

    US$2.3 billion

    (100%)


    and skarn deposit with central copper-only

    ores and an outer band of copper-zinc


    individual power producers


    and zinc flotation circuits, bismuth/ moly cleaning circuit

    image

    Nominal milling capacity 52 Mtpa

    and lead/bismuth Mitsubishi 10% concentrates

    transported by truck

    of information

    on investment and production

    ore zone

    300 km concentrate pipeline

    2

    Our assets

    Port facilities at Huarmey


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    image

    Silver, lead and zinc Cannington

    200 km

    southeast

    Public road and

    Group-owned

    100% BHP Billiton Mining leases

    granted by

    Concentrate

    production

    Underground

    Broken Hill-type

    On-site power

    station

    Beneficiation plant:

    primary and

    of Mt Isa,

    airstrip

    Queensland

    commenced

    silver-lead-zinc

    operated under secondary grinding

    Queensland, Australia

    Product trucked to Yurbi, then by rail to public port

    Government expire in 2029

    in 1997,

    subsequent projects improved mill throughput and metal recovery

    sulphide deposit

    contract

    circuits, pre-flotation circuits, flotation circuits, leaching circuits, concentrate filtration circuit, paste plant

    image

    3 Corporate Governance Statement

    Nominal milling capacity: 3.4 Mtpa

    image

    image

    Copper and uranium Olympic Dam

    560 km

    northwest of Adelaide,

    Public road

    Copper cathode trucked to ports

    100% BHP Billiton Mining lease

    granted by South Australian

    Acquired in

    2005 as part of WMC

    Underground

    Large poly-metallic deposit of iron

    Supplied via

    275 kV power line from

    Underground

    automated train and trucking

    South Australia Uranium oxide

    transported by road to ports

    Government

    expires in 2036

    right of extension

    acquisition

    Copper production

    oxide-copper- uranium-gold mineralisation

    Port Augusta,

    transmitted by ElectraNet

    network feeding

    crushing, storage and ore hoisting

    for 50 years (subject began in 1988

    facilities

    to remaining mine life)

    Nominal milling capacity raised

    to 9 Mtpa in 1999 Optimisation project

    completed

    in 2002 New copper solvent

    extraction plant

    commissioned in 2004

    2 grinding circuits Nominal milling capacity: 10.3 Mtpa

    image

    4

    Remuneration Report

    Flash furnace produces copper anodes, then refined to produce copper cathodes (1)


    image

    1. Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings.

    Development projects

    Americas

    Escondida

    The Organic Growth Project 1 (OGP1), is the replacement project for the Los Colorados concentrator with a new 152 ktpd plant. This project is in execution. We expect this project to provide additional processing capacity and allow access to high-grade ore. OGP1 was approved in February 2012 with budgeted expenditure of US$3.8 billion (US$2.2 billion BHP Billiton share). Project completion is targeted for the first half of CY2015. Work on OGP1 was 79 per cent complete at 30 June 2014.

    We announced the Escondida Water Supply project (EWS) in July 2013, which consists of a new 2,500 litres per second sea water desalination facility. This project will provide an alternative water supply to Escondida, as water usage increases upon completion of the 152 ktpd OGP1 copper concentrator. Construction of the

    new desalination facility commenced in July 2013 and includes the development of two pipelines, four high-pressure pump stations,

    a reservoir at the mine site and high-voltage infrastructure to support the system. The new facility is expected to be commissioned in 2017 at a cost of US$3.4 billion (US$2.0 billion BHP Billiton share). Prior to completion of the EWS project, water supply for OGP1 will continue to be sourced from aquifers and the existing 500 litres per second desalination plant.

    image

    5

    Directors’ Report

    The Oxide Leach Area Project (OLAP), is also in execution phase. This project involves the creation of a new dynamic leaching pad and mineral handling system that will include several overland conveyors. The new pad is expected to maintain oxide leaching capacity at current levels following the exhaustion of the existing heap leach in CY2014. OLAP was approved in February 2012

    with budgeted expenditure of US$721 million (US$414 million BHP Billiton share). A US$212 million increase in the budget of OLAP to US$933 million (US$536 million BHP Billiton share)

    was approved in March 2014. Work on the project was 93 per cent complete at 30 June 2014, and is expected to be completed in the second half of CY2014.



        1. Copper Business continued

          Pampa Norte

          The Spence Growth Option (SGO) project, currently being studied in pre-feasibility stage, plans to exploit the hypogene sulphide resource with associated molybdenum sulphide by building a

          95 ktpd concentrator at the current Spence operation. SGO would extend the mine life by 50 years following the current 2025 closure date. As the hypogene ore underlies the supergene reserves currently being exploited, the need for pre-stripping and additional mine maintenance infrastructure is minimised. The option of using existing solvent extraction and electrowinning infrastructure to recover copper by leaching low-grade chalcopyrite ores in parallel to the concentrator is also being considered. SGO would increase the overall copper production at Spence by approximately 220 kilotonnes per annum (ktpa) in the first 10 years.

          Olympic Dam

          A pre-feasibility study is being conducted regarding the proposed expansion of Olympic Dam. The objective of the study is to identify the full range of development path alternatives for Olympic Dam by investigating all possible mining methods and less capital-intensive designs, including new technologies.

          In July 2014, we lodged an application for assessment by the Australian and South Australian Governments to construct and operate a demonstration plant on the existing mining lease at Olympic Dam. This process would enable heap leaching trials to progress to the next phase as part of our efforts to identify

          an alternative, less capital-intensive process for extracting metals from ore mined underground. Should government and Board approvals be granted, construction of the demonstration plant

          is expected to commence in the second half of CY2015. A trial period of 36 months is envisaged, commencing in late 2016.

          Resolution Copper

          We hold a 45 per cent interest in the resolution Copper project in the US state of Arizona, a project which is operated by rio Tinto (55 per cent interest). resolution is among the top 10 largest undeveloped copper assets in the world and could eventually

          become the largest copper producer in North America. In FY2014, resolution Copper completed a pre-feasibility study into a 120 ktpd underground panel cave operation and processing facility. Further opportunities to economically optimise the project and minimise any technical risks have been identified, and the project plans to study these opportunities. Additionally, a Mine Plan of Operations was submitted to the U.S. Forest Service in November 2013. Approval

          of the plan would allow mining to occur on lands where the Company currently holds mineral title.

          Throughout FY2014, resolution Copper continued to advance sinking of the No #10 Shaft to gain access to the orebody. Following cooling and ventilation upgrades during FY2014, No #10 Shaft is expected to reach a final depth of 2,116 metres by December 2014. Our share of project expenditure for FY2014 was US$38 million.

          Exploration activities

          Our greenfield copper exploration activities during FY2014 were focused on advancing targets within Chile and Peru. Greenfield activities include opportunity identification, application for and acquisition of mineral title, early reconnaissance operations and drilling programs.


        2. Iron Ore Business

    image

    Iron Ore

    Our Iron Ore Business is one of the leading iron ore producers

    in the world. We sell lump and fines products produced in Australia and pellets from our operations in Brazil.

    Our two assets consist of the following:

    Western Australia Iron Ore

    Operations at Western Australia Iron Ore (WAIO) involve an integrated system of mines and more than 1,000 kilometres of rail infrastructure and port facilities in the Pilbara region of northern Western Australia, with our headquarters located in Perth. Our focus is to safely maximise output through operating our mines and utilising available infrastructure at our disposal. This includes our plan to continue

    to grow production following the recent completion of a number of expansion projects and ongoing debottlenecking of the supply

    chain to underpin potential further growth in capacity to 290 Mtpa.

    We have expanded our WAIO operations in response to increasing demand for iron ore, particularly from China. Since 2001, we have completed eight expansion projects to increase our mine, rail and port capacity. Our share of FY2014 production was 193 Mt of ore, which is expected to increase in FY2015 to 211 Mtpa.

    We have been transitioning to owner-operated mines since September 2011 when we acquired the HWE Mining subsidiaries from Leighton Holdings. We completed the transition to owner-operated mines with the last contractor run site, Orebody 18, finalising its transition during FY2014.

    Our Pilbara reserve base is relatively concentrated, allowing us to plan our development around a series of integrated mining hubs joined to the orebodies by conveyors or spur lines. This approach enables us to maximise the value of installed infrastructure by using the same processing plant and rail infrastructure for a number of orebodies.

    Lump and fines products are sold to steel mills in China, South Korea, Japan, Singapore, Hong Kong, Taiwan, Switzerland and Australia under long-term and short-term contracts. Contract prices are generally linked to market indices.

    In order to establish a consistent, long-term, high-quality lump ore product with a stable grade, we recently transitioned to a blended lump product. The product is a blend of lump ores produced from the Newman, Area C and Jimblebar mining areas, known as Newman Blend lump. During FY2014, 23 per cent of our sales were lump and 77 per cent were fines.

    2.1.3 Iron Ore Business continued

    WAIO operations

    Our WAIO operations consist of four main joint ventures: Mt Newman, Yandi, Mt Goldsworthy and Jimblebar. Our interest in the joint ventures is 85 per cent, with Mitsui and ITOCHU owning the remaining 15 per cent. The joint ventures are unincorporated except Jimblebar, where we diluted our interest in a subsidiary company to 85 per cent in July 2013 for which BHP Billiton received total consideration

    of US$1.5 billion.

    The Mt Newman Joint Venture (JV) consists of a number of orebodies joined by conveyors and spur lines to a mining hub at Mt Whaleback.


    Pilbara Region

    image

    Perth


    Karratha


    1

    Strategic Report

    Finucane Island

    South Hedland


    image

    Great


    Port Hedland

    Nelson Point


    Marble Bar


    Yarrie

    Ore is crushed, beneficiated (where necessary) and blended

    to create the Newman Blend for lump and fines. The ore is then transported to port using Mt Newman JV-owned rail facilities. The Yandi JV comprises the Yandi mine where ore is crushed and screened and then transported by rail on the Newman main line. The Mt Goldsworthy JV consists of the Area C mine in the central Pilbara and the Yarrie mine in northern Pilbara. Ore is crushed and screened at Area C and transported by rail to the hub at

    Northern Highway


    Karijini National


    2

    Our assets

    Yandi


    image

    Chichester Deviation

    Mt Whaleback. Production at Yarrie was suspended on 25 February 2014, following improved productivity at our other mining operations.

    The Jimblebar operation was officially opened on 23 April 2014 and comprises the new Jimblebar mine located 40 kilometres east of Newman. Jimblebar delivered first production in the September

    image

    2013 quarter and produced 9 Mt during FY2014. Jimblebar is expected to deliver phase one capacity of 35 Mtpa by the end of FY2015.

    Park

    Area C

    Orebody 23/24/25


    Mt Whaleback Orebody 29/30/35


    Newman


    Orebody 18

    Jimblebar/ Wheelarra

    Production from Wheelarra, a sublease of the Jimblebar tenement,

    Existing Operations

    Note: Location of markers


    image

    which was previously processed through Newman, was permanently Port Hedland – Newman Rail Line

    is indicative only

    connected to the Jimblebar processing hub during the period.

    All ore is transported by rail on the Mt Newman JV and

    Mt Goldsworthy JV rail lines to our port facilities. A typical train configuration consists of two locomotives per 124 ore cars, called a rake, with two rakes per train. Each individual ore car carries approximately 128 tonnes of iron ore. Our rail operations are controlled from Perth via our integrated remote operations centre which co-locates rail control, port production control, mine dispatch control and mine fixed plant control.

    Our port facilities are located on both sides of the harbour at

    Port Hedland. These facilities consist of Nelson Point, owned by the Mt Newman JV, and Finucane Island, owned by the Mt Goldsworthy JV. The port facilities include five ore car dumpers, three screening plants, nine stackers, five reclaimers, stock and blending yards,

    and eight ship loaders. Vessels depart the harbour via a dredged channel that is approximately 45 kilometres long and has a width of 300 metres.

    Goldsworthy Rail Line


    image


    image

    3 Corporate Governance Statement

    Along with the other joint venture partners, we have entered into marketing agreements in the form of joint ventures with certain customers. These customer joint ventures, JW4, Wheelarra and POSMAC, involve subleases of part of WAIO’s existing mineral leases. The ore is sold to the existing joint ventures with contractual terms applying to the customers’ share. As a consequence, we are entitled to 85 per cent of production from these subleases and the customer joint ventures are not jointly controlled operations for accounting purposes.

    image

    4

    Remuneration Report

    WAIO Mineral resources and Ore reserves are reported for the Pilbara as a whole by ore type, to reflect our production of the Newman Blend lump product and our single logistics chain and associated management system. The reserve life of our Western Australian mines is 16 years.

    Samarco

    We are a 50–50 joint venture partner with Vale at the Samarco operation in Brazil. Samarco is currently comprised of a mine and two concentrators located in the state of Minas Gerais, and three pellet plants and a port located in Anchieta in the state of Espirito Santo. Three 396-kilometre pipelines connect the mine site to the pelletising facilities.

    image

    5

    Directors’ Report

    Samarco’s main product is iron ore pellets. Extraction and beneficiation of iron ore is conducted at the Germano facilities in the municipalities of Mariana and Ouro Preto. Conveyor systems are used to extract the ore and convey it from the mines. Ore beneficiation then occurs in concentrators, where crushing, milling, desliming and flotation processes produce iron concentrate. The concentrate leaves the concentrators as slurry and is pumped through the slurry pipelines from the Germano facilities to the pellet plants in Ubu, Anchieta, where the slurry is processed into pellets. The iron ore pellets are then heat treated. The pellet output is stored in a stockpile yard before being shipped out of the Samarco-owned

    Port of Ubu in Anchieta.

    Pellets are independently marketed by Samarco and sold to steelmakers in 20 countries in the Americas, Asia, Africa, the Middle East and Europe, with prices generally linked to market indices.

    In FY2014, our share of production was 11 Mt of pellets. The reserve life of Samarco is 39 years.



    Information on Iron Ore mining operations

    The following table contains additional details of our mining operations. This table should be read in conjunction with the production (refer to section 2.2.2) and reserve tables (refer to section 2.3.2).



    Mine type &


    Mine &

    Means


    Title, leases


    mineralisation

    Facilities, use

    location

    of access

    Ownership

    Operator or options

    History

    style

    Power source & condition

    image

    image

    Iron ore Mt Newman Joint Venture

    Pilbara region,

    Private road

    BHP Billiton 85%

    BHP Billiton:

    Mining lease

    Production began Open-cut

    From May 2014

    Newman Hub:

    Western Australia

    Iron ore transported

    Mitsui ITOCHU Iron 10%

    Mt Whaleback under the Iron Ore at Mt Whaleback Orebodies (Mt Newman) orebody in 1969

    Bedded ore types classified as per

    Yarnima power station started

    primary and secondary crushing

    Mt Whaleback Orebodies

    18, 24, 25, 29,

    30 and 35

    by Mt Newman ITOCHU Minerals JV-owned rail and Energy

    to Port Hedland of Australia 5% (427 km)

    18, 24, 25,

    29, 30 and 35 Operatorship of Orebody 18

    transitioned

    Agreement Act

    1964 expires in

    2030 with right to successive renewals

    Production from host Archaean Orebodies 18, 24, or Proterozoic

    25, 29, 30 and 35 iron formation, complements which are production from Brockman, and

    supplying

    approximately two thirds of power, with a supplementary

    and screening

    plants (nominal capacity 60 Mtpa); heavy media beneficiation plant,


    image

    Yandi Joint Venture

    to BHP Billiton of 21 years

    in July 2014

    Mt Whaleback First ore from Newman Hub

    as part of rGP4

    construction delivered in 2009

    Marra Mamba

    contract with Alinta

    Dewap Newman power station

    stockyard blending

    facility, single cell rotary car dumper, train-loading facility

    image

    Orebody 25: primary and secondary crushing and screening plant (nominal capacity 10 Mtpa)

    Pilbara region,

    Private road

    BHP Billiton 85%

    BHP Billiton Mining lease

    Development

    Open-cut

    From May 2014

    Three processing

    Western

    Iron ore

    Mitsui Iron Ore

    under the Iron Ore began in 1991

    Channel Iron

    Yarnima power

    plants, primary

    Australia

    transported Corporation 7% by Mt Newman ITOCHU Minerals JV-owned rail and Energy of

    (Marillana Creek) Agreement Act 1991 expires in

    First shipment in 1992

    Capacity

    Deposits are Cainozoic fluvial sediments

    station started supplying approximately

    crusher and overland conveyor (nominal capacity

    to Port Hedland Australia 8% (316 km)

    Yandi JV’s railway spur links Yandi mine to Newman main line

    image

    image

    JW4 Joint Venture

    2033 with one

    renewal right to a further 21 years

    expanded between 1994

    and 2013

    two thirds of

    power, with a supplementary contract with Alinta Dewap Newman power station

    78 Mtpa)

    Ore delivered to two train-loading facilities

    Pilbara region,

    Private road

    BHP Billiton 68%

    BHP Billiton Sublease over

    Operations

    Open-cut

    From May 2014

    Mine site

    Western Australia

    Iron ore on-sold to

    Yandi JV, then

    ITOCHU Minerals and Energy of Australia 6.4%

    part of the mining began in lease under the April 2006 Iron Ore Ore currently

    Channel Iron Deposits are Cainozoic

    Yarnima power station started supplying

    transported via Mitsui Iron Ore

    rail to Finucane Corporation 5.6%

    (Marillana Creek)

    Agreement Act

    being produced

    is sold to Yandi JV

    fluvial sediments

    approximately

    two thirds of

    Island and Nelson Point shipping facilities, Port Hedland


    image

    image

    Jimblebar operation

    JFE Steel Australia 20% Sublease

    agreement over

    JW4 deposit

    1991 expires

    in 2033 with one renewal right for a further 21 years

    and blended with Yandi ore

    power, with a supplementary contract with Alinta Dewap Newman power station

    Pilbara region,

    Private road BHP Billiton 85%

    BHP Billiton Mining lease

    Production at

    Open-cut

    From May 2014

    Two primary and

    Western

    ITOCHU Minerals

    under the Iron Ore Jimblebar began

    Bedded ore types

    Yarnima power

    secondary crusher,

    Australia

    and Energy of Australia 8%, Mitsui Iron Ore Corporation 7%

    (McCamey’s Monster) Agreement Authorisation Act 1972 expires in

    in March 1989

    From 2004, production was transferred to Wheelarra as

    classified as per host Archaean or Proterozoic banded iron formation, which

    station started supplying approximately two thirds of power, with a

    ore handling plant, stockyards and supporting mining hub infrastructure (nominal capacity

    2030 with rights

    part of the

    are Brockman and supplementary

    55 Mtpa)

    to successive renewals

    of 21 years

    Wheelarra sublease agreement

    First ore from newly

    commissioned Jimblebar mine was delivered in September 2013

    Marra Mamba

    contract with Alinta Dewap Newman power station


    image

    image

    1

    Strategic Report

    Information on Iron Ore mining operations continued



    Mine type &


    Mine &

    Means



    Title, leases


    mineralisation

    Facilities, use

    location

    of access

    Ownership

    Operator

    or options

    History

    style

    Power source & condition

    Iron ore continued


    image

    image

    Wheelarra Joint Venture

    Pilbara region,

    Private road

    BHP Billiton 51%

    BHP Billiton

    Sublease

    Wheelarra JV

    Open-cut

    From May 2014

    Two primary and

    Western Australia

    rail spur line to Newman

    ITOCHU Minerals and Energy of

    Operatorship agreement over transitioned to the Wheelarra

    produces iron ore Bedded ore types from Wheelarra classified as per

    Yarnima power station started

    secondary crusher, ore handling plant,

    Hub closed and iron ore is now transported via conveyor to Jimblebar mine (6 km)

    Australia 4.8% Mitsui Iron Ore Corporation 4.2% Maanshan

    Iron & Steel Australia 10% Shagang

    BHP Billiton in January 2014

    deposit of

    Jimblebar lease with ITOCHU Minerals and Energy of Australia, Mitsui Iron Ore

    deposit of

    Jimblebar lease Ore produced

    is processed and

    blended with Jimblebar ore

    at Jimblebar mine

    host Archaean or Proterozoic banded iron formation, which is Brockman

    supplying

    approximately two thirds of power, with a supplementary

    image

    2

    Our assets

    contract with Alinta Dewap Newman

    stockyards and

    supporting mining hub infrastructure (nominal capacity 55 Mtpa)

    Australia 10%

    and four separate and then sold to

    power station


    image

    image

    3 Corporate Governance Statement

    Mt Goldsworthy Joint Venture

    Hebei Iron & Steel Australia 10% Wugang

    Australia 10% Sublease agreement over

    Wheelarra deposit

    subsidiaries of Chinese steelmakers

    This arrangement, entitles us to 85% of production from the Wheelarra sublease consistent with BHP Billiton ownership in

    image

    Mt Newman JV

    Mt Newman JV

    Pilbara region,

    Private road

    BHP Billiton 85%

    BHP Billiton 4 mineral leases

    Operations

    Area C, Yarrie

    From May 2014

    Ore processing

    Western

    Yarrie and

    Mitsui Iron Ore

    under the Iron Ore commenced at

    and Nimingarra

    Yarnima power

    plant, primary

    Australia Area C Yarrie

    Nimingarra iron ore transported by

    Corporation 7% ITOCHU Minerals and Energy

    (Mt Goldsworthy) Agreement Act 1964 and the Iron

    Mt Goldsworthy in 1966 and at Shay Gap in 1973

    all open-cut Bedded ore types classified as per

    station started supplying approximately

    crusher and overland conveyor (nominal capacity:

    Nimingarra

    Mt Goldsworthy of Australia 8%

    Ore (Goldsworthy

    Original

    host Archaean

    two thirds of

    50 Mtpa)

    JV-owned rail

    – Nimingarra)

    Goldsworthy

    or Proterozoic iron power, with a

    to Port Hedland (218 km)

    Agreement Act 1972, expire

    mine closed in 1982

    formation, which are Brockman,

    supplementary contract with Alinta

    Area C iron ore

    between 2014 and Associated

    Marra Mamba

    Dewap Newman

    image

    transported

    by Mt Newman JV-owned rail to Port Hedland (360 km)

    Mt Goldsworthy JV railway spur links Area C mine to Yandi railway spur


    POSMAC Joint Venture

    Pilbara region, Private road


    BHP Billiton 65%

    2028, with rights to successive renewals

    of 21 years

    A number of smaller mining leases granted under the Mining Act 1978 expire

    in 2026


    image

    image

    BHP Billiton Sublease over

    Shay Gap mine closed in 1993

    Mining at Nimingarra mine ceased in 2007, then continued from adjacent Yarrie area

    Opened Area C mine in 2003 Yarrie mine

    suspended

    operations in February 2014


    Operations

    and Nimingarra


    Open-cut

    power station


    From May 2014


    4

    Remuneration Report

    Ore processing

    Western Australia

    Iron ore on-sold to

    ITOCHU Minerals and Energy of

    part of mineral lease held by

    commenced in October 2003

    Bedded ore types classified as per

    Yarnima power station started

    plant, primary crusher and

    Mt Goldsworthy Australia 8%,

    Mt Goldsworthy

    Iron ore currently

    host Archaean

    supplying

    overland conveyor

    JV, it is then

    Mitsui Iron Ore

    JV under the

    being produced

    or Proterozoic iron approximately

    (nominal capacity:

    transported via Corporation 7% Mt Goldsworthy POSCO 20%

    Iron Ore

    (Mt Goldsworthy)

    is sold to

    Mt Goldsworthy

    formation, which is Marra Mamba

    two thirds of power, with a

    50 Mtpa)

    JV-owned rail and

    Mt Newman JV-owned rail

    to Port Hedland

    Sublease agreement over POSMAC deposit

    Agreement Act

    1964 with rights to successive renewals

    of 21 years

    JV and blended

    with Area C ore

    supplementary

    image

    5

    Directors’ Report

    contract with Alinta Dewap Newman power station


    image



    Information on Iron Ore mining operations continued



    Mine type &


    Mine &

    Means


    Title, leases


    mineralisation

    Facilities, use

    location

    of access

    Ownership

    Operator or options

    History

    style

    Power source & condition

    Iron ore continued

    image

    image

    Samarco

    Southeast

    Public road

    BHP Billiton 50%

    Samarco Mining

    Production began Open-cut

    Samarco holds

    Facilities with

    Brazil

    Conveyor belts transport iron ore to beneficiation plant

    Three slurry pipelines transport concentrate

    to pellet plants on coast

    Iron pellets exported via port facilities

    of Samarco Mineração SA Vale 50%

    concessions granted by Brazilian Government as long as Alegria complex mined according to agreed plan

    at Germano mine in 1977 and at Alegria complex in 1992

    Second pellet plant built in 1997 Third pellet

    plant, second

    concentrator and second pipeline built in 2008

    Fourth pellet plant, third concentrator and third pipeline built in 2014

    Itabirites (metamorphic quartz-hematite rock) and friable hematite ores

    interests in

    2 hydroelectric power plants which supply 20.3% of its electricity

    Power supply contract with Cemig Geração e Transmissão expires in 2022

    capacity to process and pump 24 Mtpa ore concentrate and produce and ship

    22.3 Mtpa pellets (100% basis)


    image


    Development projects

    Western Australia Iron Ore

    WAIO has been executing a number of expansion projects in recent years. These projects, approved in March 2011 for a total of

    US$7.4 billion (BHP Billiton share US$6.6 billion) plus pre-commitment funding of US$2.3 billion (BHP Billiton share US$2.1 billion), were designed to deliver an integrated operation with a minimum capacity of 220 Mtpa (100 per cent basis).

    These projects included:

    expected to be delivered below the revised budget of US$1 billion.

    Western Australia Iron Ore – Orebody 24 mine

    In FY2014, WAIO completed execution of its development of the Orebody 24 mine, located approximately 10 kilometres northeast of Newman. Orebody 24 is a sustaining mine to maintain iron ore production output from the Mt Newman JV operations. The project was approved in November 2011 and included the construction

    of an ore crushing plant, train loadout facility, rail spur and other associated support facilities. The project was delivered at a cost of US$0.5 billion (BHP Billiton share), subject to finalisation, in the September 2014 quarter versus a budget of US$0.7 billion.

    Samarco

    During FY2011, Samarco shareholders approved a US$3.5 billion (US$1.75 billion BHP Billiton share) expansion project, the Fourth Pellet Plant Project (P4P), consisting of a fourth pellet plant, a new concentrator and a third slurry pipeline. The project is complete, with its first pellet production in March 2014. This has expanded Samarco’s iron ore pellet production capacity from 22.3 Mtpa to

    30.5 Mtpa. The final cost of the project was US$3.2 billion (US$1.6 billion BHP Billiton share).

    Exploration activities

    Western Australia

    WAIO has a substantial existing reserve base supported by considerable additional mineralisation all within a 250-kilometre radius of our existing infrastructure. This concentration of orebodies also gives WAIO the flexibility to add growth tonnes to existing hub infrastructure and link brownfield developments to our existing mainline rail and port facilities. The total area covered by exploration and mining tenure amounts to 6,500 square kilometres. This excludes crown leases, and general purpose and miscellaneous licences, which are used for infrastructure space and access.

    The majority of deposits are located on five main lease areas held by BHP Billiton and our joint venture partners, as appropriate.

    Iron ore mineralised materials fall mainly within the Hamersley ranges of the Pilbara district, with a minor component of the inventory lying within the Pilbara Craton of northwest Western Australia.

    In FY2014, exploration activity was completed over multiple project areas and deposits. The total drilling carried out amounts to 492,000 metres, composed of reverse circulation drilling of 421,500 metres, diamond drilling of 52,500 metres and hydrology drilling of 18,000 metres consisting of approximately 5,300 drill holes. Total exploration expenditure amounted to US$166 million.

    Guinea Iron Ore

    BHP Billiton has a 41.3 per cent interest in a joint venture that holds the Nimba Mining Concession and four iron ore prospecting permits in southeast Guinea.

    On 29 July 2014, BHP Billiton and ArcelorMittal signed an agreement for the acquisition by ArcelorMittal of BHP Billiton’s 43.5 per cent stake in Euronimba Limited, which holds an effective 95 per cent interest in the Mount Nimba iron ore project in Guinea. Completion of the transaction is subject to the receipt of regulatory approval and other customary closing conditions.

    Liberia Iron Ore

    BHP Billiton has a 100 per cent interest in a Mineral Development Agreement with the Government of Liberia. This enables the further exploration and development of our Liberian iron ore mineral leases.

    2.1.4 Coal Business

    image

    Coal

    Our Coal Business, headquartered in Brisbane, Australia, is the world’s largest supplier of seaborne metallurgical coal, a key input in steel production. Our Coal Business is also one of the largest suppliers of seaborne energy coal (also known as thermal or steaming coal) and a significant domestic energy coal supplier

    in the countries where its mines are located.

    Our export metallurgical coal customers are steel producers around


    Abbot Point

    image

    Bowen


    Collinsville


    Mackay

    Broadmeadow

    South Walker


    1

    Strategic Report

    Dalrymple Bay

    image

    BMA Hay Point Coal Terminal

    the world, principally in China, India, Japan and Europe. In FY2014, the majority of our metallurgical coal sales contracts were based on annual volumes, with prices largely negotiated on a monthly, index or spot basis.

    We are a domestic supplier of energy coal to the electricity generation industry in Australia, South Africa and the United States. Our domestic energy sales are generally made to nearby power stations under long-term fixed price or cost plus arrangements. Export sales are delivered to power generators and industrial users principally in China, India, Japan, Europe and the Middle East, under contracts

    Goonyella

    Riverside

    Moranbah

    Caval Ridge


    Saraji


    Emerald

    Creek


    Daunia Poitrel

    Peak Downs

    Dysart

    Norwich Park


    Gregory Crinum


    Blackwater


    Rockhampton


    RG Tanna

    that are generally index linked or short-term fixed.

    Total metallurgical coal production in FY2014 was 45.1Mt and total energy coal production in FY2014 was 73.5 Mt.

    image

    Our assets, located in Australia, South Africa, Colombia and the United States, consist of both open-cut and underground mines. At our open-cut mines, overburden is removed after blasting, using either draglines or truck and shovel. Coal is then extracted using excavators or loaders and loaded onto trucks to be taken


    image

    image

    image

    BMA Mine BMC Mine

    Blackwater


    image

    image

    BMA Port Port


    image

    Rail

    Barney Point

    2

    Our assets

    Gladstone


    0 50 100km

    image

    to stockpiles. At our underground mines, coal is extracted by either longwall or continuous miner. The coal is then transported to stockpiles on the surface by conveyor. Coal from stockpiles

    is then crushed, and for a number of the operations, washed

    and processed through the coal preparation plant. Domestic coal is then transported to the nearby customer via conveyor, truck

    or rail. Export coal is transported to the port via trucks or trains, and as part of this coal supply chain both single and multi-user rail and port infrastructure is used.

    Our assets consist of the following:

    Queensland Coal

    Queensland Coal comprises the BHP Billiton Mitsubishi Alliance (BMA) and BHP Billiton Mitsui Coal (BMC) Assets in the Bowen Basin in Central Queensland, Australia.

    The Bowen Basin is well positioned to supply the seaborne market because of its high-quality metallurgical coals, which are ideally suited to efficient blast furnace operations, and its geographical proximity to Asian customers. We have access to key infrastructure in the Bowen Basin, including a modern, multi-user rail network, our own coal loading terminal at Hay Point, located near the city

    of Mackay. We also have contracted capacity at three other multi-user port facilities including the Port of Gladstone (rG Tanna Coal Terminal), Dalrymple Bay Coal Terminal and Abbot Point Coal Terminal.

    BHP Billiton Mitsubishi Alliance

    image

    3 Corporate Governance Statement

    BMA comprises two unincorporated joint ventures – Central Queensland Coal Associates Joint Venture (CQCA) and Gregory Joint Venture. We share 50–50 ownership with Mitsubishi Development.

    BMA owns and operates open-cut and underground metallurgical coal mines in the Bowen Basin and also owns and operates the Hay Point Coal Terminal. The terminal consists of coal inloading dump stations, stacker reclaimers and two ship loaders, capable of loading 44 Mtpa of coal. The terminal is undergoing expansion to increase its capacity to 55 Mtpa through the addition of a third ship loader. This infrastructure enables us to blend products from multiple mines of BMA to optimise the value of our production and to satisfy customer requirements.

    image

    4

    Remuneration Report

    BMA operates the Goonyella riverside, Broadmeadow, Daunia, Caval ridge, Peak Downs, Saraji, Gregory Crinum and Blackwater mines. In May 2012, production ceased at Norwich Park mine, following a review of the mine’s viability. In October 2012, production also ceased at the Gregory open-cut mine, part of the Gregory Crinum complex. First production commenced at Caval ridge

    in the June 2014 quarter.

    Our share of total production in FY2014 was 29.3 Mt. Production figures for BMA include some energy coal (less than three per cent). The reserve lives of our mines range from 2.8 years at Gregory Crinum to 37 years at Saraji. The reserve life for each mine is set out in section 2.3.2.

    BHP Billiton Mitsui Coal

    image

    5

    Directors’ Report

    BMC is a subsidiary company owned by BHP Billiton (80 per cent) and Mitsui and Co (20 per cent). BMC owns and operates South Walker Creek and Poitrel, both open-cut metallurgical coal mines in the Bowen Basin.

    Total production in FY2014 was 8.3 Mt. The reserve lives of our mines are 15 years at Poitrel and 11 years at South Walker Creek. The reserve life for each mine is set out in section 2.3.2.



    2.1.4 Coal Business continued

    Illawarra Coal

    Our wholly owned Illawarra Coal Asset owns and operates three underground coal mines – Appin, West Cliff and Dendrobium,

    in the Illawarra region of New South Wales, Australia. The mines supply metallurgical coal to the nearby BlueScope Port Kembla steelworks and to other domestic and export markets. The Appin mine is currently being developed to sustain Illawarra Coal’s production following the end of the mine life at West Cliff.

    Coal is exported via the Port Kembla Coal Terminal, in which

    we own a 16.67 per cent interest. Total production in FY2014 was

    7.5 Mt. Production figures for Illawarra Coal include some energy coal (approximately 20 per cent).The reserve lives of our mines range from 2.0 years at West Cliff to 25 years at Appin. The reserve life for each mine is set out in section 2.3.2.

    Energy Coal South Africa

    Energy Coal South Africa (known as BECSA) operates four energy coal mines – Khutala, Klipspruit, Middelburg and Wolvekrans, in the Witbank region in the province of Mpumalanga, South Africa.

    BECSA is 90 per cent owned by BHP Billiton, two per cent owned by its employees through an Employee Share Ownership Plan (ESOP) and eight per cent owned by a Broad-Based Black Economic Empowerment (B-BBEE) consortium led by Pembani Group Proprietary Limited.

    Production in FY2014 was 30.4 Mt. The reserve lives of our

    mines range from 5.8 years at Khutala to 23 years at Middelburg. The reserve life for each mine is set out in section 2.3.2.

    In FY2014, approximately 55 per cent of BECSA’s sales were to Eskom, the government-owned electricity utility in South Africa. The remaining production was exported, predominantly to India and China, via the richards Bay Coal Terminal (rBCT), in which we own a 21 per cent interest.


    New Mexico Coal

    We own and operate the San Juan energy coal mine located in the US state of New Mexico. The mine transports its production directly to the nearby San Juan Generating Station. The San Juan mine has a reserve life of 3.5 years, which is the life of the current customer contract. Production for FY2014 was 5.7 Mt.

    We also operate the nearby Navajo mine, located on Navajo Nation land in New Mexico. Full ownership of the Navajo Coal Company transferred to the Navajo Transitional Energy Company

    (NTEC), an entity of the Navajo Nation, effective 30 December 2013. New Mexico Coal and NTEC have entered into a Mine Management Agreement where New Mexico Coal will continue as mine operator until 31 December 2016.

    Navajo mine transports its production directly to the nearby Four Corners Power Plant. Navajo mine reduced capacity during FY2014 from 7.4 Mtpa to 5.4 Mtpa in response to reduced customer demand. Production for FY2014 was 5.1 Mt. As we retain control of the mine until full consideration is paid, production continues to be reported by the Group.

    New South Wales Energy Coal

    Our wholly owned New South Wales Energy Coal Asset owns

    and operates the Mt Arthur Coal open-cut energy coal mine in the Hunter Valley region of New South Wales, Australia. New South Wales Energy Coal produced 20 Mt in FY2014 and has a reserve life of 33 years. In FY2014, we delivered approximately seven per cent of Mt Arthur’s production to a local power station and exported the rest, predominantly to Japan and China, via the port of Newcastle.

    We own a 35.5 per cent interest in the Newcastle Coal Infrastructure Group, which operates the Newcastle Third Port export coal loading facility. The facility currently has a port expansion project in execution (refer to Development projects). We also have a 1.75 per cent interest in Port Waratah Coal Services Limited, which operates

    two coal loading facilities at the port of Newcastle.

    Cerrejón

    We have a one-third interest in Cerrejón Coal Company, which owns and operates one of the world’s largest open-cut export energy coal mines, located in the La Guajira province of Colombia. Cerrejón also owns and operates integrated rail and port facilities through which the majority of production is exported to European, Middle Eastern, North and South American customers. In FY2014,

    our share of Cerrejón production was approximately 12.3 Mt. Cerrejón has a reserve life of 17 years.

    In FY2012, Cerrejón commenced an expansion project (P40), which is ultimately expected to increase our share of production from 10.7 Mtpa to 13.3 Mtpa (refer to Development projects).

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    1

    Strategic Report

    Information on Coal mining operations

    The following table contains additional details of our mining operations. The tables should be read in conjunction with the production (refer to section 2.2.2) and reserves tables (refer to section 2.3.2).



    Mine & location


    Means of access


    Ownership


    Operator


    Title, leases or options


    History

    Mine type & mineralisation style


    Power source


    Facilities, use & condition

    Australia



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    Central Queensland Coal Associates Joint Venture

    Bowen Basin,

    Public road

    BHP Billiton 50%

    BMA Mining leases,

    Goonyella mine

    All open-cut except Queensland

    On-site

    Queensland, Australia Goonyella

    riverside,

    Coal transported by rail to

    Hay Point, Gladstone and

    Mitsubishi Development 50%

    including undeveloped tenements, expire between 2014 and

    commenced in 1971, merged with adjoining riverside mine

    Broadmeadow: longwall underground

    Bituminous coal

    electricity grid under long-term contracts

    beneficiation processing facilities Combined nominal

    capacity: in excess

    Broadmeadow Abbot Point ports

    2043, renewable

    in 1989.

    is mined from the

    of 61 Mtpa

    Daunia Caval ridge Peak Downs Saraji Blackwater and Norwich Park mines

    Distances between the mines and port are between 160 km and

    315 km

    for further periods as Queensland Government legislation allows

    Mining is permitted to continue under the legislation during the renewal application period

    Operates

    as Goonyella riverside Production

    commenced:

    at Peak Downs in 1972

    Saraji in 1974 Norwich Park in 1979 Blackwater in 1967

    Broadmeadow (longwall operations)

    in 2005

    Daunia in 2013 and Caval ridge in 2014

    Permian Moranbah and rangal Coal measures

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    2

    Our assets

    Products range from premium quality, low volatile, high vitrinite,

    hard coking coal to medium volatile hard coking coal, to weak coking coal, some pulverised coal injection (PCI) coal and medium ash thermal coal as a secondary product


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    3 Corporate Governance Statement

    Gregory Joint Operation

    Bowen Basin, Queensland, Australia

    Gregory and Crinum mines

    Public road

    Coal transported by rail to Hay Point and Gladstone ports

    Distances between the mines and port

    BHP Billiton 50% Mitsubishi Development 50%

    BMA Mining leases, including undeveloped tenements, expire between 2014 and

    2043, renewable for further periods as Queensland

    Production commenced at Gregory in 1979

    Crinum mine (longwall) commenced in 1997

    Production at

    Gregory: open-cut Crinum: longwall underground

    Bituminous coal is mined from the Permian German Creek Coal measures

    Queensland electricity grid under long-term contracts

    On-site beneficiation processing facility

    Nominal capacity: in excess of 6 Mtpa

    are between

    Government

    Gregory open-cut Product is a high

    310 km and

    370 km


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    BHP Billiton Mitsui Coal

    legislation allows Mining is permitted to continue under

    the legislation

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    4

    Remuneration Report

    during the renewal application period

    mine ceased in October 2012

    volatile, low ash hard coking coal

    Bowen Basin,

    Public road

    BHP Billiton 80%

    BMC Mining leases,

    South Walker

    Open-cut

    Queensland

    South Walker Creek

    Queensland,

    Coal transported

    Mitsui and

    including

    Creek commenced Bituminous coal

    electricity

    coal beneficiated

    Australia South Walker Creek and

    Poitrel mines

    by rail to Hay Point

    and Dalrymple Bay ports

    Distances between the mines and

    port are between 135 km and

    165 km

    Co 20%

    undeveloped tenements expire between 2014

    and 2031, and are renewable

    for further periods as Queensland Government legislation allows

    Mining is permitted to continue under the legislation during the renewal application period

    in 1996 Poitrel commenced

    in 2006

    is mined from the Permian rangal Coal measures

    Produces a range of coking coal, PCI coal and thermal coal products with medium to high phosphorus and ash properties

    grid

    on-site

    Nominal capacity: in excess of 5 Mtpa Poitrel mine has

    red Mountain

    joint venture with adjacent Millennium Coal mine to share processing and rail loading facilities

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    5

    Directors’ Report

    Nominal capacity: in excess of 3 Mtpa


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    Information on Coal mining operations continued








    Mine type &



    Mine &

    Means



    Title, leases


    mineralisation

    Power

    Facilities, use

    location

    of access

    Ownership

    Operator

    or options

    History

    style

    source

    & condition

    Australia continued

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    Illawarra Coal

    Illawarra,

    Public road

    100% BHP Billiton Mining leases expire Production

    Underground

    New South

    2 beneficiation

    New South Wales, Australia

    Coal transported by road or rail to BlueScope Steel’s

    between 2016 and

    2033, renewable for further periods

    commenced at Appin in 1962 (longwall

    Bituminous coal is mined from the Permian Illawarra

    Wales electricity grid

    facilities

    Nominal capacity: in excess of 9 Mtpa

    Dendrobium

    Port Kembla

    as NSW Government operations 1969)

    Coal Measures

    Appin and West Cliff mines


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    Mt Arthur Coal

    steelworks

    or Port Kembla for export Distances

    between the

    mines and port are between

  4. km and 38 km

legislation allows

West Cliff in 1976 and Dendrobium in 2005

Produces premium quality hard coking coal and some thermal coal from the Wongawilli and Bulli seams

Approximately Public road

100% BHP Billiton Various mining

Production

Open-cut

Local energy

Beneficiation

126 km northwest

of Newcastle, New South Wales, Australia

Domestic coal transported by conveyor to Bayswater Power Station

Export coal transported by third party rail

to Newcastle port

leases and licences expire between 2010 and 2032

renewal is being sought for expired mining leases

The original approvals permit mining and other

commenced in 2002 Government

approval permits

extraction of up to 36 Mtpa of run of mine coal from underground and open-cut

Produces a medium providers rank bituminous

thermal coal (non-coking)

facilities: coal handling, preparation, washing plants

Nominal capacity: in excess

of 23 Mtpa

activities to continue operations, with

during renewal application

open-cut extraction limited to 32 Mtpa

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South Africa Khutala

100 km east of Public road

BHP Billiton 90%

BHP Billiton BECSA holds a 100% Production

Combination

Eskom

Underground and

Johannesburg, Domestic coal

Newshelf 1129

share of Converted

commenced

open-cut and

(national

open-cut crushers:

Gauteng

transported by

Proprietary Limited

Mining right,

in 1984

underground

power

Nominal capacity:

Province,

overland

(BEE SPV) 8%

granted

Open-cut

Produces a medium supplier)

in excess

South Africa

conveyor to Kendal Power Station

Eyami Trust Management Company (rF) Proprietary Limited (ESOP) 2%

October 2011 Mining right was amended

15 February 2013

to include Portion 16 of

Zondagsvlei 9 IS

operations in 1996 Commenced

mining thermal/

metallurgical coal for domestic market in 2003

rank bituminous thermal coal (non-coking)

under long-term contracts

of 12 Mtpa


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Middelburg/Wolvekrans

20 km

Public road

BHP Billiton 90%

BHP Billiton BECSA and Tavistock Production

Open-cut

Eskom under

Beneficiation

southeast of Witbank,

Mpumalanga

Export coal transported to rBCT by third

Newshelf 1129 Proprietary Limited (BEE SPV) 8%

are joint holders of 3 Converted Mining rights in the

commenced in 1982 Middelburg

Produces a medium long-term rank bituminous contracts thermal coal, most

facilities: tips and crushing plants, 2 export

Province,

party rail

Eyami Trust

previous JV ratio

Mines and Duvha of which can be

wash plants,

South Africa

(558 km)

Domestic coal transported by conveyor to Duvha Power

Management Company (rF) Proprietary Limited (ESOP) 2%

Previous JV (84:16)

(84:16)

BECSA is the 100% holder of a fourth Converted Mining right

Colliery became one operation in 1995

Douglas- Middelburg

beneficiated for the European or Asian export markets

middlings wash plant, de-stone plant

Nominal capacity: in excess of

Station

with Glencore Xstrata

All 4 rights comprise Optimisation

17 Mtpa


Klipspruit

30 km west of


Public road

Plc (through Tavistock Collieries Pty Limited) was amended in February 2008


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BHP Billiton 90%

the Middelburg Mine Complex (1)

The Converted Mining rights were granted

during October and December 2011(2)


BHP Billiton BECSA holds a

project completed in July 2010

Mine was split into Middelburg and Wolvekrans during 2011


Production


Open-cut


Eskom, under Beneficiation

Witbank, Mpumalanga

Export coal transported to

Newshelf 1129 Proprietary Limited

Converted Mining right, granted

commenced in 2003

Produces a medium long-term rank bituminous contracts

facilities: tip and crushing plant,

Province,

rBCT by third

(BEE SPV) 8%

on 11 October 2011

Expansion project thermal coal, most

export wash plant

South Africa

party rail (611 km)

Eyami Trust Management Company (rF) Proprietary Limited (ESOP) 2%

Phola Coal Plant in JV with Anglo Inyosi Coal 50%

completed in FY2010, includes 50% share in Phola Coal Plant

of which can be beneficiated for the export market

Nominal capacity Phola Coal Processing Plant: in excess of 7 Mtpa


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1

Strategic Report

Information on Coal mining operations continued








Mine type &



Mine &

Means



Title, leases


mineralisation

Power

Facilities, use

location

of access

Ownership

Operator

or options

History

style

source

& condition

image

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United States San Juan

25 km west of

Public road

100% BHP Billiton Mining leases from

Surface mine

Underground

San Juan

Coal sized and

Farmington,

Coal transported

federal and state

operations

Produces a medium Generating

blended to meet

New Mexico, US


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Navajo

40 km

by truck and conveyor to San Juan Generating Station


Public road


BHP Billiton 0%

governments Leases viable as long as minimum

production criteria

achieved


BHP Billiton Lease held by

commenced in 1973 Development

of underground

mine to replace open-cut mine approved in 2000


Production

rank bituminous thermal coal (non-coking suitable for

the domestic market only)


Open-cut

Station


Four Corners

contract quantities and specification Nominal capacity:

6 Mtpa


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2

Our assets

Stackers and

southwest of Farmington, New Mexico, US

Coal transported by rail to

Four Corners Power Plant

Navajo Transitional Energy

Company 100%

Navajo Transitional Energy Company

commenced in 1963

Divested FY2014 BHP Billiton continues

as operator

Produces a medium Power Plant rank bituminous

thermal coal (non-coking suitable for the domestic market only)

reclaimers used to size and blend coal to meet contract quantities and specification

Nominal capacity:

5.4 Mtpa

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Colombia Cerrejón

La Guajira

Public road

BHP Billiton 33.33%

Cerrejón

Mining leases

Original mine

Open-cut

Local

Beneficiation

province,

Coal exported by

Anglo American

Coal

expire in 2034

began producing

Produces a medium Colombian

facilities: crushing

Colombia

company-owned rail to Puerto Bolivar (150 km)

33.33%

Glencore Xstrata 33.33%

Company

in 1976 BHP Billiton

interest acquired

in 2000

rank bituminous thermal coal (non-coking, suitable for the export market)

power system plant with capacity

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3 Corporate Governance Statement

of 32 Mtpa and washing plant Nominal capacity:

3 Mtpa


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  1. This includes the Wolvekrans and Middelburg collieries and excludes the portion Tavistock obtained as a result of the amendment of the Douglas-Tavistock JV agreement.

  2. The JV agreement has been amended so that upon the Department of Mineral resources amending the Converted Mining rights, the mining area will be divided into an area wholly owned and operated by Tavistock and an area wholly owned and operated by BECSA as the new Douglas-Middelburg mine. Applications were made in December 2008 to the Department of Mineral resources to amend the Converted Mining rights, but a date for execution has not yet been provided. Ministerial consent to amend the Mining rights has been granted.

Development projects

BMA Expansions

In November 2011, we approved the development of the Caval ridge mine project, with a revised investment of US$1.9 billion (BHP Billiton share). The Caval ridge mine is an open-cut dragline and truck and shovel operation, with coal railed to the Hay Point Coal Terminal. First coal at the Caval ridge mine occurred in

the June 2014 quarter and the mine was 100 per cent completed at 30 June 2014.

In March 2011, we approved the expansion of the Hay Point Coal Terminal. The expansion of the terminal will deliver an additional 11 Mt of annual port capacity (100 per cent basis). Following a review of the project during FY2013, first shipment is expected in CY2015 with a revised budget of US$1.5 billion (BHP Billiton share). The project was 87 per cent complete at 30 June 2014.

Appin Area 9 Project

In June 2012, approval was given to invest US$845 million to sustain operations at Illawarra Coal by establishing a replacement mining area at Appin mine. The replacement area will have a production capacity of 3.5 Mtpa and will sustain Illawarra Coal’s production capacity at 9 Mtpa. The Appin Area 9 project was

67 per cent complete at 30 June 2014 and is expected to be operational in CY2016, whereupon it will replace production

at the West Cliff mine. The project includes roadway development, new ventilation infrastructure, new and reconfigured conveyors and other mine services.

Cerrejón P40 Project

In August 2011, we announced a US$437 million (BHP Billiton share) investment in the expansion of Cerrejón, known as the P40 Project, which is expected to enable Cerrejón’s thermal coal production


to increase by 8 Mtpa to approximately 40 Mtpa. The project scope includes a second berth and dual quadrant ship loader at Cerrejón’s 100 per cent owned and operated Puerto Bolivar, along with necessary mine, rail and associated supply chain infrastructure.

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4

Remuneration Report

Construction commenced in CY2011 and the project handled its first coal in the December 2013 quarter. The port expansion associated with the Cerrejón P40 project is currently being commissioned, although operational issues are expected to constrain capacity

to approximately 35 Mtpa (100 per cent basis) in the medium term. At 30 June 2014, the project was 94 per cent complete.

Newcastle Port Third Phase Expansion

In August 2011, we announced a US$367 million (BHP Billiton share) investment in the third stage development of the Newcastle Coal Infrastructure Group’s coal handling facility in Newcastle.

The port expansion project is expected to increase total capacity at the coal terminal from 53 Mtpa to 66 Mtpa. This is expected

to increase New South Wales Energy Coal’s allocation by 4.6 Mtpa to 19.2 Mtpa. First coal on ship, being the first ship loading through the new facility, was achieved in June 2013, ahead of schedule.

At 30 June 2014, the project was 86 per cent complete.

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5

Directors’ Report

IndoMet Coal Project

IndoMet Coal comprises seven coal contracts of work (CCoWs) covering a large metallurgical coal resource in Central and East Kalimantan, Indonesia, which was discovered by BHP Billiton in the 1990s. Following an assessment of the importance of local participation in developing the project, in 2010 we sold

a 25 per cent interest in the project to a subsidiary of PT Adaro Energy TBK. We retain 75 per cent of the project and hold management responsibility.

Construction works on infrastructure development for this project is ongoing with initial production from a small mine expected in CY2015.



2.1.5 Aluminium, Manganese and Nickel Business

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Aluminium

Our Aluminium, Manganese and Nickel Business, headquartered in Perth, Australia, has a portfolio of assets in three stages of the

aluminium value chain: mining bauxite, refining bauxite into alumina and smelting alumina into aluminium metal. We are a major producer of aluminium, with total production in FY2014 of 1.2 Mt. We also produced 5.2 Mt of alumina in FY2014.

During FY2014, we consumed 35 per cent of our alumina production in our aluminium smelters and sold the balance to third party smelters. Our alumina and aluminium customers are located mostly in western Europe and Asia. Our alumina sales are a mixture of legacy long-term contract sales at LME-linked prices and long-term contracts priced from an alumina index or spot negotiated prices. Prices for our aluminium sales are generally linked to prevailing LME and premium prices. We have a diversified customer portfolio, with demand driven by end-use consumption in transportation, packaging, construction and household items.

Our assets consist of the following operations:

Boddington/Worsley

Boddington/Worsley is an integrated bauxite mining/alumina refining operation located in Western Australia. The Boddington bauxite mine supplies bauxite ore to the Worsley alumina refinery via a

51-kilometre long conveying system. We own 86 per cent of the mine and the refinery. It is our sole integrated bauxite, mining/alumina refining asset, and one of the largest and lowest cost refineries

in the world. Worsley’s Efficiency and Growth project reached nameplate capacity in FY2014, bringing the capacity of the refinery to 4.6 Mtpa (100 per cent) of alumina. Our share of Worsley’s FY2014 production was 3.9 Mt of alumina. Worsley’s export customers include our own Hillside and Mozal smelters in southern Africa.

Boddington has a reserve life of 17 years.


Hillside and Bayside

Our wholly owned Hillside and Bayside smelters are located

at richards Bay in South Africa. Hillside is the largest aluminium smelter in the southern hemisphere. Hillside and Bayside imported alumina from our Worsley refinery and Alcoa during FY2014; however, the Alcoa supply was discontinued by 30 June 2014. In June 2014, Bayside completed the ramp-down of its remaining smelting capacity of 97 ktpa. The Bayside Casthouse continues to operate and began processing liquid metal transfers from Hillside in June 2014. Hillside sources power from Eskom, the South African state utility, under long-term contracts, with prices linked to the LME price of aluminium (except for Hillside Potline 3, where the price is linked

to the South African and US producer price indices). The Bayside Casthouse sources power from the grid at market rates. Production in FY2014 for Hillside was 715 kt and Bayside was 89 kt.

Mozal

We own 47.1 per cent of and operate the Mozal aluminium smelter located near Maputo, Mozambique. Mozal sources power generated by Hydro Cahora Basa via Motraco, a transmission joint venture between Eskom and the national electricity utilities of Mozambique and Swaziland. Our share of Mozal’s FY2014 production was 266 kt.

Mineração Rio do Norte

We own a 14.8 per cent investment in Mineração rio do Norte (MrN), which owns and operates a large bauxite mine, located at Porto Trombetas in the province of Pará, Brazil. MrN has a reserve life of 6.1 years.

Alumar

Alumar is an integrated alumina refinery/aluminium smelter. We own 36 per cent of the Alumar refinery and 40 per cent of the smelter. Alcoa operates both facilities. The operations, and their integrated port facility, are located at São Luís in the Maranhão province of Brazil. BHP Billiton sources the majority of the bauxite it processes at Alumar from MrN.

The Alumar smelter has currently suspended production from pot lines 2 and 3 reducing overall annual capacity to 124 ktpa, from 447 ktpa (100 per cent), due to challenging global market

conditions in primary aluminium and increased costs. During FY2014, approximately 16 per cent of Alumar’s alumina production was

used to feed the smelter, while the remainder was exported. Our share of Alumar’s FY2014 saleable production was 1.3 Mt of alumina and 104 kt of aluminium.

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1

Strategic Report

Information on Aluminium mining operations

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The following table contains additional details of our mining operations. This table should be read in conjunction with the production (refer to section 2.2.2) and reserve tables (refer to section 2.3.2).


Mine & location


Means

of access Ownership Operator


Title, leases

or options History

Mine type & mineralisation

style Power source


Facilities, use & condition


Bauxite

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Boddington bauxite mine

Boddington, 123 km southeast of

Public road

Ore transported to Worsley

BHP Billiton 86%

Sojitz Alumina 4% Japan Alumina

BHP Billiton Worsley Alumina

Mining leases from Western Australia Government expire

Opened in 1983

Significantly

Open-cut Surficial gibbsite-rich

JV-owned power line connected

Crushing plant Nominal capacity: 19 Mtpa bauxite

Perth, Western

alumina refinery

Associates 10%

Pty Ltd

over the period

extended

lateritic weathering to Worsley

Australia

by a 51 km conveyor

Ownership structure of operator as

per Worsley JV

2014–2032, all with 21-year renewal available. renewal process in progress for lease that expires in September 2014.

2 subleases from Alcoa of Australia

in 2000

of Darling range rocks

alumina refinery site


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2

Our assets

Mineração Rio do Norte

Porto

Sealed road and

BHP Billiton 14.8%

MrN Mining rights

Production

Open-cut

On-site fuel

Crushing facilities,

Trombetas, 880 km from Belém, the capital of Pará state, Brazil

28 km of rail connects mine area with Porto Trombetas

Alcoa and affiliates 18.2%

Vale 40%

rio Tinto Alcan 12% Votorantim 10%

Hydro 5%

granted by Brazilian Government until reserves exhausted

commenced in 1979

Expanded in 2003

Lateritic weathering oil generators of nepheline

3 Corporate Governance Statement

4

Remuneration Report

5

Directors’ Report

syenite occurring primarily as gibbsite in a clay matrix overlain by clay sediments

conveyors, wash plant

Nominal capacity: 18 Mtpa washed bauxite


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Information on Aluminium smelters and refineries


Smelter, refinery

or processing plant Location Ownership Operator

Title, leases or options


Product

Nominal production capacity


Power source

Aluminium and alumina










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Hillside

Aluminium smelter richards Bay,


100% BHP Billiton Freehold title to


Standard


726 ktpa primary


Eskom (national


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Bayside

200 km north of Durban, South Africa

property, plant, equipment Leases over

harbour facilities

aluminium ingots aluminium Liquid metal

transferred

to Bayside Casthouse

power supplier) under long-term contracts Contract prices for

Hillside 1 and 2 linked

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to LME aluminium price Prices for Hillside 3 linked to SA and US producer price indices

Aluminium smelter richards Bay,

200 km north of Durban, South Africa


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Mozal

100% BHP Billiton Freehold title to property, plant, equipment

Primary aluminium, slab products

ramp-down activities completed in June 2014, going forward only the Casthouse will operate processing liquid metal

from Hillside

Power requirements reduced due to closure of reduction plant

Future power supply from grid at market rates

Aluminium smelter 17 km from

Maputo, Mozambique


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Worsley

BHP Billiton 47.1% of Mozal SArL Mitsubishi 25%

Industrial Development

Corporation of

South Africa Ltd 24% Mozambique Government 3.9%

BHP Billiton 50-year

government concession

to use the land renewable for 50 years

Standard aluminium ingots

561 ktpa Motraco under long-term contract

Contract price-linked to SA producer price index

Alumina refinery 55 km

BHP Billiton 86%

BHP Billiton

2,480 ha refinery

Metallurgical

4.6 Mtpa JV-owned on-site coal

northeast of Bunbury, Western Australia

Sojitz Alumina 4% Japan Alumina Associates 10%

Ownership structure of operator as

per Worsley JV

Worsley Alumina Pty Ltd

lease from Western grade alumina Australia

Government expires in 2025 21-year renewal

available

power station, third party on-site gas-fired steam power generation plant, third party leased on-site multifuel co-generation steam and power generation plant



Development projects


Alumar


Alumina refinery and

São Luís,

Aluminium smelter:

Alcoa

All property

Alumina and refinery:

Electronorte (Brazilian

aluminium smelter

Maranhão, Brazil

BHP Billiton 40%

Alcoa 60%

operates both facilities

held freehold

aluminium ingots 3.5 Mtpa alumina

Smelter: 124 ktpa

public power generation concessionaire), under

Alumina refinery: BHP Billiton 36% Alcoa and affiliates 54%

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rio Tinto 10%

primary aluminium (Potline 1)

long-term contract

There were no active aluminium development projects in FY2014.

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1

Strategic Report

2.1.5 Aluminium, Manganese and Nickel Business continued

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Manganese

Our Aluminium, Manganese and Nickel Business produces a combination of manganese ores and alloys from sites in South Africa and Australia. We are the world’s largest producer of manganese ore and one of the top global producers of manganese alloy. Manganese alloy is a key input into the steelmaking process. Manganese

high-grade ore is particularly valuable to alloy producers because of the value in use differential over low-grade ore. The value in use differential is the degree to which high-grade ore is proportionately

more efficient than low-grade ore to process in the production of alloy.

Manganese alloy smelters are a key conduit of manganese alloy and ore into steelmaking and enable us to access markets with an optimal mix of ore and alloy, optimise production to best suit

market conditions and give us technical insight into the performance of our ores in smelters.

Approximately 83 per cent of our ore production is sold directly

to external customers, predominantly located in China, South Korea and India, and the remainder is used as feedstock in our alloy smelters. Manganese alloy is sold to steel mills, mainly in Europe and North America. Manganese ore and alloy are sold on short-term or spot contracts, with prices linked to published indices. Neither commodity is exchange traded, and prices are largely determined

by supply and demand balances. Ore is priced per dry metric tonne unit and referenced to a benchmark ore of 44 per cent manganese grade cost insurance freight (CIF) China. Alloy is priced per tonne, typically on a delivered basis (DDP). Manganese production in FY2014 was 8,302 kt of ore and 646 kt of alloy.

We own and manage all of our manganese mining operations and alloy plants through the Manganese joint ventures with

Anglo American. In South Africa, we own 60 per cent of Samancor Holdings (Pty) Ltd which via its wholly owned subsidiary, Samancor Manganese (Pty) Ltd, operates the Metalloys division. Samancor Manganese owns 74 per cent of Hotazel Manganese Mines (Pty) Ltd (HMM), which gives us an effective interest of 44.4 per cent in HMM. The remaining 26 per cent of HMM is owned under the terms of the South African B-BBEE legislation, which reflects our commitment

4

Remuneration Report

5

Directors’ Report

to economic transformation in South Africa. In Australia, we own 60 per cent of Groote Eylandt Mining Company Pty Ltd (GEMCO) and we have an effective interest of 60 per cent in GEMCO’s wholly owned subsidiary, Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO).

Our assets, Manganese Australia and Manganese South Africa, consist of the following:

Mines

HMM

image

2

Our assets

HMM owns the Mamatwan open-cut mine and the Wessels underground mine. Mined ore is processed into a saleable product through a crushing and wet screening operation, with some ore undergoing further processing in the form of dense media separation and sintering. Approximately 25 per cent of the ore mined is beneficiated into alloy at Metalloys, with the rest being exported via road and rail through Port Elizabeth (approximately 950 kilometres) and Durban (approximately 1,100 kilometres).

In FY2014, the total manganese ore production was 3,526 kt. Wessels has a reserve life of 46 years and Mamatwan has a reserve life of 18 years.

GEMCO

GEMCO is an open-cut mining operation, located 16 kilometres from our port facilities at Milner Bay, Northern Territory. These operations, consisting of crushing, screening, washing and dense media separation, combined with its high-grade ore are in relative close proximity to the Asian export markets. FY2014 production

of manganese ore was 4,776 kt. GEMCO has a reserve life of 11 years.

Alloy Plants

Metalloys

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3 Corporate Governance Statement

The Samancor Manganese Metalloys alloy plant is one of the largest manganese alloy producers in the world. Metalloys produces high- and medium-carbon ferromanganese using ore transported by rail from HMM. Production of manganese alloy in FY2014 was 377 kt.

TEMCO

TEMCO, located in Tasmania, is a medium-sized producer of high-carbon ferromanganese, silicomanganese and sinter using ore shipped from GEMCO, primarily using hydroelectric power. Production of manganese alloy in FY2014 was 269 kt.

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Information on Manganese mining operations

The following table contains additional details of our mining operations. These tables should be read in conjunction with the production (refer to section 2.2.2) and reserve tables (refer to section 2.3.2).



Mine type &


Mine &

Means



Title, leases


mineralisation

Facilities, use

location

of access

Ownership

Operator

or options

History

style

Power source & condition

image

Manganese ore Hotazel Manganese Mines (HMM)


Kalahari Basin, Public road

BHP Billiton

BHP Billiton

Existing New

Mamatwan

Mamatwan:

Eskom (national Mamatwan

South Africa Most ore and

44.4%


Order rights

commissioned

open-cut

power supplier) beneficiation plant:

Mamatwan and sinter products

Anglo American

valid until 2035

in 1964

Wessels:

under contracts primary, secondary

Wessels mines

transported by rail Approximately

34% of ore

beneficiated locally, balance exported via Port Elizabeth (approximately 950 km) and Durban (approximately 1,100 km)

29.6%

Ntsimbintle 9%

NCAB 7%

Iziko 5%

HMM Education Trust 5%

Wessels commissioned in 1973

underground Banded iron manganese

ore type

at regulated prices

and tertiary crushing with associated screening plants

Dense medium separator and sinter plant (capacity

1 Mtpa sinter) (1) Wessels: primary and secondary

crushing circuits

with associated screening (1)


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image

Groote Eylandt Mining Company (GEMCO)

Groote Eylandt, Ore transported

BHP Billiton 60%

BHP Billiton All leases on

Commissioned

Open-cut

On-site diesel

Beneficiation

Northern Territory, Australia

16 km from concentrator by road train to port at Milner Bay

Anglo American 40%

Aboriginal land held under Aboriginal Land rights (Northern Territory) Act 1976

Valid until 2031

in 1965

Sandstone claystone sedimentary manganese ore type

power generation

process: crushing, screening, washing and dense media separation

Produces lump and fines products Capacity:

    1. wet Mtpa


      image

      1. Capacity: Mamatwan – approximately 3.5 Mtpa of ore; Wessels – approximately 1 Mtpa of ore.


Information on Manganese smelters, refineries and processing plants


Smelter, refinery



Title, leases


Nominal production


or processing plant

Location

Ownership

Operator or options

Product

capacity

Power source

image

image

Manganese alloy Metalloys

Manganese alloy plant

(division of Samancor Manganese (Pty) Ltd)

Meyerton,

South Africa

BHP Billiton

60%

Anglo American

BHP Billiton Freehold title over

property, plant and equipment

Manganese alloys

including high-carbon ferromanganese,

410 ktpa high-carbon

ferromanganese (including hot metal)

Eskom

32 MW of internal power generated from

40%

refined (medium-carbon 90 ktpa medium-

furnace off-gases


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image

Tasmanian Electro Metallurgical Company (TEMCO)

ferromanganese) alloy carbon ferromanganese

Manganese alloy plant Bell Bay,

Tasmania, Australia

BHP Billiton 60%

Anglo American 40%

BHP Billiton Freehold title over

property, plant and equipment

Ferroalloys, including high-carbon ferromanganese, silicomanganese and sinter

150 ktpa high-carbon ferromanganese

120 ktpa silicomanganese 325 ktpa sinter

Aurora Energy

On-site energy recovery unit generates 11MW for internal use


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Development projects

GEMCO expansion

The US$279 million GEMCO Expansion Project (GEEP2) (US$167 million BHP Billiton share), approved in July 2011, was delivered on time and on budget in the December 2013 quarter.

GEEP2 increased GEMCO’s capacity from 4.2 Mtpa to 4.8 Mtpa through the introduction of a dense media circuit by-pass facility. The expansion has also addressed key infrastructure constraints by increasing road and port capacity to 5.9 Mtpa, creating 1.1 Mtpa of additional capacity for future expansions.

Premium Concentrate (PC02)

In August 2014, a project to build a stand-alone PC02 plant at GEMCO was approved for US$139 million (BHP Billiton share US$83 million). The project is expected to complete by the December 2015 quarter and produce 0.2 Mtpa in FY2016 and ramp-up to 0.5 Mtpa in FY2017.

HMM

The central block development project at the Wessels underground mine is being progressed in two phases. The first phase of the project was commissioned in December 2013 at a cost of US$92.4 million (US$40.7 million BHP Billiton share) and comprised the construction of the ventilation shaft and development of the associated underground ventilation network.

The second phase will complete infrastructure required to expand the mine to 1.5 Mtpa and comprises the development

of a run of mine infrastructure handling system for central block, the development and equipping of underground workshops, including materials handling design, procurement and installation. A feasibility study was successfully completed in FY2014 and was approved for execution in July 2014 at a cost of US$30.8 million (US$13.7 million BHP Billiton share). The project is expected to complete in the September 2016 quarter.

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1

Strategic Report

2.1.5 Aluminium, Manganese and Nickel Business continued

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Nickel

Our Aluminium, Manganese and Nickel Business primarily supplies nickel products to customers in the stainless steel industry, principally in northern Asia and western Europe. Nickel is an important component of the most commonly used types of stainless steel.

We also supply nickel to other markets, including the specialty alloy, foundry, chemicals and refractory material industries. We are a major producer of nickel with total production in FY2014 of 143 kt of contained nickel. We sell our nickel products at various stages including concentrate, matte and metal under a mix of long-term, medium-term and spot volume contracts, with prices linked to the LME nickel price.

Our assets, located in Australia and Colombia, consist of the following operations:

Nickel West

Our wholly owned Nickel West Asset in Western Australia consists of an integrated system of mines, concentrators, a smelter and a refinery. We mine nickel-bearing sulphide ore at our Mt Keith and Cliffs operations, located north of Kalgoorlie. Mt Keith has a reserve life of 10 years. Cliffs is an underground mine with a reserve life

of 3.2 years. We operate concentrator plants at Mt Keith and at Leinster, which also concentrate ore from Cliffs. On 31October 2013, production at the Nickel West Leinster Perseverance underground mine was suspended following a significant seismic event. A subsequent review of the incident determined it was unsafe to resume operations. The rocky’s reward open-cut mine, near Leinster, provided a temporary alternative ore supply to Nickel West, with mining operations completed in July 2014.

We also operate the Kambalda concentrator south of Kalgoorlie, where we source ore through tolling and concentrate purchase arrangements with third parties in the Kambalda region. We also have purchase agreements in place for the direct purchase of concentrate, which we re-pulp, dry and blend with other concentrate processed at Kambalda.

Ore from our Mt Keith mine is concentrated at Mt Keith and then transported by road approximately 110 kilometres to Leinster for drying. Ore from the Cliffs and Leinster mines is concentrated and dried at Leinster. Dry nickel concentrate is then transported via

road and rail approximately 375 kilometres to our Kalgoorlie smelter. Concentrate from Kambalda is transported via rail approximately

5

Directors’ Report

60 kilometres to our Kalgoorlie smelter.

Small volumes of concentrate are sold into the external market; however, the majority of volumes are processed into nickel matte, containing approximately 65 per cent nickel. In FY2014, we exported approximately 29 per cent of our nickel matte production. The remaining nickel matte is transported, principally by rail, to our Kwinana nickel refinery, a distance of approximately 650 kilometres. The nickel matte is processed into nickel metal in the form of

LME grade briquettes and nickel powder, together with a range of saleable by-products.

Nickel West production in FY2014 was 98.9 kt of contained nickel.

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2

Our assets

Cerro Matoso

Our 99.98 per cent owned Cerro Matoso Asset in Colombia combines a lateritic nickel ore deposit with a ferronickel smelter. The smelter produces high-purity, low-carbon ferronickel granules. Cerro Matoso has an estimated reserve life of 15 years. Production in FY2014 was

44.3 kt of nickel in ferronickel form.

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3 Corporate Governance Statement

4

Remuneration Report

During FY2013, Cerro Matoso successfully extended its mining concessions with the Colombian Government until 2029, with a conditional extension until 2044. The agreement includes an increase in the royalty rate from 12 per cent to 13 per cent. The extension of the contract term to 2044 is conditional on Cerro Matoso increasing processing capacity by 50 per cent by 2022.


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Information on Nickel mining operations

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The following table contains additional details of our mining operations. This table should be read in conjunction with the production (refer to section 2.2.2) and reserve tables (refer to section 2.3.2).


Mine & location


Means

of access Ownership Operator


Title, leases or

options History

Mine type & mineralisation

style Power source


Facilities, use & condition


Nickel

image

image

Mt Keith

485 km north of Kalgoorlie, Western Australia


Private road Nickel concentrate

transported by

road to Leinster nickel operations for drying and


100% BHP Billiton Mining leases granted by Western Australia Government

Key leases expire between 2015

and 2034


Officially commissioned in 1995 by WMC

Acquired in 2005 as part of WMC acquisition


Open-cut Disseminated textured magmatic

nickel-sulphide

mineralisation, associated with

a metamorphosed


On-site third leased party gas-fired turbines

Contracts expire in 2024 Natural gas


Concentration plant with a nominal capacity: 11 Mtpa of ore


image

Leinster

on-shipping

renewals at

government discretion

ultramafic intrusion sourced and

image

transported under separate long-term contracts

375 km north of Kalgoorlie, Western Australia


image

image

Cliffs

481 km north of Kalgoorlie, Western Australia


image

image

Cerro Matoso

Public road Nickel concentrate

shipped by road

and rail to Kalgoorlie nickel smelter


Private road Nickel ore transported by

road to Leinster

nickel operations for further processing

100% BHP Billiton Mining leases granted by Western Australia Government

Key leases expire between 2019

and 2034 renewals at government

discretion


100% BHP Billiton Mining leases granted by Western Australia Government

Key leases expire between 2025

and 2028 renewals

at government

discretion

Production commenced in 1979

Acquired in 2005 as part of WMC acquisition

Perseverance underground mine ceased operations during 2013


Production commenced in 2008

Acquired in 2005 as part of WMC acquisition

Open-cut Steeply dipping

disseminated and

massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows and intrusions


Underground Steeply dipping massive textured

nickel-sulphide

mineralisation, associated with metamorphosed ultramafic

lava flows

On-site third leased party gas-fired turbines

Contracts expire in 2024 Natural gas

sourced and

transported under separate long-term contracts


Supplied from Mt Keith

Concentration plant with a nominal capacity: 3 Mtpa of ore


Mine site

Montelibano, Córdoba, Colombia

Public road BHP Billiton 99.98%

Employees and

BHP Billiton New terms agreed

effective 1 October

2012 until 2029

Mining commenced in 1980

Open-cut Nickel-laterite mineralisation

National electricity grid under

Ferronickel smelter and refinery integrated

former employees

with conditional

Nickel production formed from

contracts

with the mine

0.02%

extension to 2044

started in 1982

residual weathering expiring in

Beneficiation plant:

if ore processing

Ownership

of ophiolitic

December 2014 primary and

capacity is increased increased to 53% peridotite

New supply

secondary crusher

50% by 2022

in 1989 and to 99.94% in 2007

Expansion project to double installed capacity completed

in 2001

contract agreed for 2016 to 2018

renewal process for 2015

in progress Domestic natural gas

for drier and

kiln operation supplied by owned pipeline

Gas supply contracts expiring December 2021

Nominal capacity: 50 ktpa of nickel in ferronickel form

Actual production depends on nickel grade from the mine


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1

Strategic Report

Information on Nickel smelters, refineries and processing plants

Smelter, refinery

or processing plant Location Ownership Operator

Title, leases

or options Product

Nominal production

capacity Power source


Nickel

image

image

Kambalda

Nickel concentrator 56 km south

of Kalgoorlie, Western


100% BHP Billiton Mineral leases granted by Western Australia


Concentrate containing approximately


1.6 Mtpa ore

Ore sourced through tolling and concentrate


On-site third party leased gas-fired turbines supplemented by access

Australia

Government

14% nickel

purchase arrangements to grid power


image

Kalgoorlie

Key leases expire in 2028 renewals at

government

image

discretion

with third parties in Kambalda region

Contracts expire in January 2024

Natural gas sourced and transported under separate long-term contracts

Nickel smelter Kalgoorlie, Western Australia


image

image

Kwinana

Nickel refinery 30 km south of Perth, Western Australia

100% BHP Billiton Freehold title over the property


100% BHP Billiton Freehold title over the property

Matte containing approximately 65% nickel


LME grade nickel briquettes, nickel powder

Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate

110 ktpa nickel matte On-site third party

image

2

Our assets

leased gas-fired turbines Contracts expire

in January 2024

Natural gas sourced and transported under separate long-term contracts


70 ktpa nickel metal Power is sourced from the

local grid which is supplied under a retail contract


image


Development projects

There were no active nickel development projects in FY2014.

2.1.6 Marketing

BHP Billiton’s Marketing organisation manages the Group’s revenue line and is responsible for:

Our responsibilities require an active presence in the various commodities markets, the global freight market, and in crude and gas pipeline transportation. We manage the supply chain for

our products and develop strong relationships with our customers. We actively manage the levels of finished goods inventory, supply vendor payables and trade receivables, thereby ensuring we do not carry excess working capital. We also manage credit and price risk by assessing customers for creditworthiness while ensuring our sales positions are reflective of the market at the time of delivery by linking to commodity market indices.

Marketing adds value by releasing full economic value of the Group’s products through maximising unit price; minimising the costs of distribution and major traded raw materials that are consumed

in the Businesses’ production processes; supporting the Businesses in optimising the value of our resources via our approach to quality and other commercial parameters; and ensuring the Group’s view of long-run markets is well informed and insightful.

Our market insight is strengthened by our proximity to our customers and the flow of information in our centralised marketing structure. We research and analyse the fundamentals of demand and supply and integrate this knowledge into long-run views of the commodity markets, enabling the Group to plan and invest optimally.

The primary hub for our marketing activities is Singapore, while our marketing of oil and gas is headquartered in Houston, United States. The two hub offices incorporate all the functions required to manage marketing and distribution from our Businesses to our customers.

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3 Corporate Governance Statement

In addition, we have marketers located close to our customers in 14 cities across the world. This model enables centralised decision-making supported by regional liaison offices close to our customers that build long-term value-creating relationships.

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4

Remuneration Report

The consolidation of commercial accountabilities through our centralised model enables the optimisation of our sales positions, provides greater value to distribution activities and ensures more effective risk management, which improves our commercial capability. Marketing demonstrates leadership in the drive towards improved liquidity and transparency in the markets for many of our commodities through our investments in electronic platforms as physical sales channels, such as the development and introduction of globalOrE, globalCOAL and the China Beijing International Mining Exchange. We actively focus on sustaining relationships with our customers to assure our access to market and to sell our products at market prices.

Within the Singapore hub, we have a centralised ocean freight business that manages our in-house freight requirements for the Group. The objective of the freight business is to create a competitive advantage through the procurement of safe, sustainable shipping solutions, which both maximise production throughput and minimise costs through the Group’s supply chains.

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5

Directors’ Report

As one of the largest global shippers of bulk commodities, we are seen as a key trading partner, allowing us to select among the

highest quality freight service providers and ship owners. The scope and scale of our commodity portfolio and extensive fleet of hire chartered vessels allows us to arbitrage and optimise positions

to minimise freight costs. This includes flexibility in diverting tonnages between markets; maximising tonnages for both inbound and outbound journeys; and parcelling of commodities.

We are proud of our strong partnerships with our customers.

We provide them with reliable supply of product at market-reflective prices. We engage in technical collaboration with many of our customers, to improve our understanding of their needs and help ensure they are able to make optimal use of our products.


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2.2 Production


      1. Petroleum

        The table below details Petroleum‘s historical net crude oil and condensate, natural gas and natural gas liquids production, primarily

        by geographic segment, for each of the three years ended 30 June 2014, 2013 and 2012. We have shown volumes of marketable production after deduction of applicable royalties, fuel and flare. We have included in the table average production costs per unit of production and average sales prices for oil and condensate and natural gas for each of those periods.


        image

        BHP Billiton Group share of production Year ended 30 June


        2014

        2013

        2012

        Production volumes




        Crude oil and condensate (‘000 of barrels)




        Australia

        23,645

        25,922

        31,145

        United States

        53,964

        38,724

        30,824

        Other (5)

        6,452

        7,866

        9,232

        Total crude oil and condensate

        84,061

        72,512

        71,201

        Natural gas (billion cubic feet)




        Australia

        287.5

        276.13

        249.97

        United States

        460.2

        489.03

        456.69

        Other (5)

        91.6

        109.11

        115.60

        Total natural gas

        839.3

        874.27

        822.26

        Natural Gas Liquids (1) (‘000 of barrels)




        Australia

        8,448

        7,927

        7,943

        United States

        13,620

        9,575

        5,744

        Other (5)

        18

        37

        398

        Total NGL (1)

        22,086

        17,539

        14,085

        Total production of petroleum products (million barrels of oil equivalent) (2)




        Australia

        80.01

        79.87

        80.75

        United States

        144.28

        129.80

        112.69

        Other (5)

        21.74

        26.09

        28.90

        Total production of petroleum products

        246.03

        235.76

        222.34

        Average sales price




        Crude oil and condensate (US$ per barrel)




        Australia

        111.88

        110.83

        114.33

        United States

        97.57

        102.33

        106.22

        Other (5)

        108.13

        107.46

        113.26

        Total crude oil and condensate

        102.47

        105.91

        110.66

        Natural gas (US$ per thousand cubic feet)




        Australia

        5.20

        4.73

        4.62

        United States

        4.10

        3.29

        2.82

        Other (5)

        3.92

        4.42

        4.13

        Total natural gas

        4.35

        3.76

        3.40

        Natural Gas Liquids (US$ per barrel)




        Australia

        63.12

        63.13

        61.61

        United States

        30.28

        30.41

        45.72

        Other (5)

        32.00

        28.61

        55.06

        Total NGL

        42.28

        45.70

        54.85

        Total Average production cost (US$ per barrel of oil equivalent) (3) (4)




        Australia

        8.18

        8.23

        7.95

        United States

        7.80

        6.27

        5.91

        Other (5)

        9.58

        8.45

        7.84

        Total Average production cost

        8.08

        7.18

        6.90

        1. LPG and ethane are reported as Natural Gas Liquids (NGL).

        2. Total barrels of oil equivalent (boe) conversion is based on the following: 6,000 scf of natural gas equals one boe.

        3. Average production costs include direct and indirect costs relating to the production of hydrocarbons and the foreign exchange effect of translating local currency denominated costs into US dollars, but excludes ad valorem and severance taxes.

        4. Total average production costs reported here do not include the costs to transport our produced hydrocarbons to the point of sale. Total production costs, including transportation costs, but excluding ad valorem and severance taxes, were US$11.70 per boe, US$10.85 per boe, and US$10.00 per boe for the years ended 30 June 2014, 2013 and 2012, respectively.

        5. Other is comprised of Algeria, Pakistan, Trinidad and Tobago, and the United Kingdom.


        image

        1

        Strategic Report

      2. Minerals

The table below details our mineral and derivative product production for all Businesses except Petroleum for the three years ended 30 June 2014, 2013 and 2012. The production numbers represent our share of production, including our proportional share of production for which income is derived from our equity accounted investments, unless otherwise stated. The Group changed its accounting policy for equity accounted investments from 1 July 2013 as set out in note 1 ‘Accounting policies’ and note 37 ‘Impact of new accounting standards and change in accounting policies’ in the Financial Statements. For discussion of minerals pricing during the past three years, refer to section 1.15.1.


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BHP Billiton BHP Billiton Group share of production

Group interest Year ended 30 June

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2

Our assets

3 Corporate Governance Statement

4

Remuneration Report

5

Directors’ Report


%

2014

2013

2012

Copper Business (1)





Copper





Payable metal in concentrate (‘000 tonnes)

Escondida, Chile (2)


57.5


844.7


831.5


580.5

Antamina, Peru

33.75

143.5

139.7

127.0

Pinto Valley, United States (3)

100

12.5

16.6

Total copper concentrate


1,000.7

987.8

707.5

Copper cathode (‘000 tonnes)

Escondida, Chile (2)


57.5


308.0


297.9


299.1

Pampa Norte, Chile (4)

100

233.1

232.6

263.7

Pinto Valley, United States (3)

100

0.9

4.9

5.4

Olympic Dam, Australia

100

184.4

166.2

192.6

Total copper cathode


726.4

701.6

760.8

Total copper concentrate and cathode


1,727.1

1,689.4

1,468.3

Lead





Payable metal in concentrate (‘000 tonnes)





Cannington, Australia

100

186.5

213.4

239.1

Antamina, Peru

33.75

1.5

1.0

0.8

Total lead


188.0

214.4

239.9

Zinc





Payable metal in concentrate (‘000 tonnes)





Cannington, Australia

100

57.9

56.3

54.7

Antamina, Peru

33.75

52.0

71.9

57.5

Total zinc


109.9

128.2

112.2

Gold





Payable metal in concentrate (‘000 ounces)

Escondida, Chile (2)


57.5


72.9


71.5


88.5

Pinto Valley, United States (3)

100

0.1

Olympic Dam, Australia (refined gold)

100

121.3

113.3

117.8

Total gold


194.3

184.8

206.3

Silver





Payable metal in concentrate (‘000 ounces)

Escondida, Chile (2)


57.5


4,271


2,960


3,341

Antamina, Peru

33.75

4,359

3,952

4,272

Cannington, Australia

100

25,161

31,062

34,208

Olympic Dam, Australia (refined silver)

100

972

880

907

Pinto Valley, United States (3)

100

41

59

Total silver


34,804

38,913

42,728

Uranium





Payable metal in concentrate (tonnes)





Olympic Dam, Australia

100

3,988

4,066

3,853

Total uranium


3,988

4,066

3,853

Molybdenum





Payable metal in concentrate (tonnes)





Antamina, Peru

33.75

1,201

1,561

2,346

Total molybdenum


1,201

1,561

2,346

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2.2.2 Minerals continued


BHP Billiton BHP Billiton Group share of production


%

2014

2013

2012

Iron Ore Business





WAIO

Production (‘000 tonnes) (5)





Newman, Australia

85

56,915

44,620

39,988

Yarrie, Australia (6)

85

836

1,106

768

Area C Joint Venture, Australia

85

46,960

44,717

42,425

Yandi Joint Venture, Australia

85

68,518

60,054

53,536

Jimblebar, Australia (7)

85

8,863

Wheelarra, Australia (8)

85

10,553

8,377

11,338

Total WAIO


192,645

158,874

148,055

Samarco, Brazil

50

10,919

10,982

11,423

Total iron ore


203,564

169,856

159,478

Coal Business





Metallurgical coal

Production (‘000 tonnes) (9)





Blackwater, Australia

50

6,730

5,432

4,435

Goonyella riverside, Australia

50

7,330

6,221

5,003

Peak Downs, Australia

50

4,909

4,545

3,534

Saraji, Australia

50

4,558

3,449

3,053

Gregory Joint Venture, Australia

50

2,965

2,523

1,411

Daunia, Australia

50

2,201

475

Caval ridge, Australia (10)

50

563

Norwich Park, Australia

50

1,175

Total BMA


29,256

22,645

18,611

South Walker Creek, Australia (11)

80

5,246

4,351

4,081

Poitrel, Australia (11)

80

3,063

2,712

2,612

Total BHP Billiton Mitsui Coal


8,309

7,063

6,693

Total Queensland Coal


37,565

29,708

25,304

Illawarra Coal, Australia

100

7,513

7,942

7,926

Total metallurgical coal


45,078

37,650

33,230

Energy coal





Production (‘000 tonnes)

Navajo, United States (12)


100


5,127


7,468


7,054

San Juan, United States

100

5,685

5,323

5,514

Total New Mexico Coal


10,812

12,791

12,568

Middelburg/Wolvekrans, South Africa (13)

90

13,368

14,669

14,848

Khutala, South Africa (13)

90

9,718

9,554

10,863

Klipspruit, South Africa (13)

90

7,298

7,404

7,568

Total Energy Coal South Africa


30,384

31,627

33,279

Mt Arthur Coal, Australia

100

19,964

18,010

16,757

Cerrejón, Colombia

33.3

12,332

10,017

11,663

Total energy coal


73,492

72,445

74,267

Group interest Year ended 30 June

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1

Strategic Report

2.2.2 Minerals continued

image

BHP Billiton BHP Billiton Group share of production

Group interest Year ended 30 June

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2

Our assets

3 Corporate Governance Statement

4

Remuneration Report


%

2014

2013

2012

Aluminium, Manganese and Nickel Business





Alumina





Saleable production (‘000 tonnes)





Worsley, Australia

86

3,916

3,675

2,917

Alumar, Brazil

36

1,262

1,205

1,235

Total alumina


5,178

4,880

4,152

Aluminium





Production (‘000 tonnes)





Hillside, South Africa

100

715

665

621

Bayside, South Africa (14)

100

89

96

98

Alumar, Brazil

40

104

154

170

Mozal, Mozambique

47

266

264

264

Total aluminium


1,174

1,179

1,153

Manganese ores





Saleable production (‘000 tonnes)

Hotazel Manganese Mines, South Africa (15)


44.4


3,526


3,490


3,625

GEMCO, Australia (15)

60

4,776

5,027

4,306

Total manganese ores


8,302

8,517

7,931

Manganese alloys





Saleable production (‘000 tonnes)

Metalloys, South Africa (15) (16)


60


377


374


404

TEMCO, Australia (15)

60

269

234

198

Total manganese alloys


646

608

602

Nickel





Saleable production (‘000 tonnes)





Cerro Matoso, Colombia

99.9

44.3

50.8

48.9

Nickel West, Australia

100

98.9

103.3

109.0

Total nickel


143.2

154.1

157.9

Divested businesses





Diamonds





Production (‘000 carats)





EKATI™, Canada

80

972

1,784

Total diamonds


972

1,784

Titanium minerals





Production (‘000 tonnes)





Titanium slag





richards Bay Minerals, South Africa

37.76

53

384

Rutile





richards Bay Minerals, South Africa

37.76

6

38

Zircon





richards Bay Minerals, South Africa

37.76

16

100

Total titanium minerals


75

522

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5

Directors’ Report

  1. Metal production is reported on the basis of payable metal.

  2. Shown on 100 per cent basis following the application of IFrS 10 which came into effect from 1July 2013. BHP Billiton interest in saleable production is 57.5 per cent.

  3. On 11 October 2013 BHP Billiton completed the sale of its Pinto Valley operations.

  4. Includes Cerro Colorado and Spence.

  5. Iron ore production is reported on a wet tonnes basis.

  6. Yarrie ceased production on 25 February 2014.

  7. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 85 per cent.

  8. All production from Wheelarra is now processed via the Jimblebar processing hub.

  9. Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

  10. Caval ridge achieved first production in the June 2014 quarter.

  11. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 80 per cent.

  12. BHP Billiton completed the sale of Navajo Mine on 30 December 2013. As BHP Billiton will retain control of the mine until full consideration is received, production will continue to be reported by the Group.

  13. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 90 per cent.

  14. Aluminium smelting at Bayside ceased with the closure of the final potline in June 2014.

  15. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 60 per cent, except Hotazel Manganese Mines which is 44.4 per cent.

  16. Production includes medium-carbon ferromanganese.


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2.3 Reserves and resources


2.3.1 Petroleum reserves

Reserves and production

BHP Billiton Petroleum proved reserves are estimated and reported according to US Securities Exchange Commission (SEC) standards and have been determined in accordance with SEC rule 4-10(a)

of regulation S-X. Proved oil and gas reserves are those quantities of crude oil, natural gas and natural gas liquids (NGL), which,

by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible from

a given date forward from known reservoirs, and under existing economic conditions, operating methods, operating contracts and government regulations. Unless evidence indicates that renewal of existing operating contracts is reasonably certain, estimates

of economically producible reserves reflect only the period before the contracts expire. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence within a reasonable time. Developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, and

through installed extraction equipment and infrastructure operational at the time of the reserve estimate if the extraction is by means

not involving a well. As specified in SEC rule 4-10(a) of regulation S-X, oil and gas prices are taken as the unweighted average of the corresponding first day of the month prices for the 12 months prior to the ending date of the period covered.

Estimates of oil and gas reserves are inherently imprecise, require the application of judgement and are subject to future revision. Accordingly, financial and accounting measures (such as

the standardised measure of discounted cash flows, depreciation, depletion and amortisation charges, the assessment of impairments and the assessment of valuation allowances against deferred

tax assets) that are based on reserve estimates are also subject to change.

Proved reserves were estimated by reference to available well and reservoir information, including but not limited to well logs, well test data, core data, production and pressure data, geologic data, seismic data and, in some cases, to similar data from analogous, producing reservoirs. A wide range of engineering and geoscience methods, including performance analysis, well analogues and geologic studies were used to estimate high confidence proved developed and undeveloped reserves in accordance with SEC regulations. For our conventional assets, performance of producing wells was based

on rate and pressure decline methods, including material balance, and was supplemented by reservoir simulation models where appropriate. In our Onshore US shale assets, performance of producing wells was based on decline and pressure normalised decline curve analysis methods. For wells that lacked sufficient production history, reserves were estimated using performance-based type curves and offset location analogues with similar geologic

and reservoir characteristics. When assessing proved undeveloped locations, a combination of geologic and engineering data, and where appropriate, statistical analysis was used to support the assignment of proved undeveloped reserves. Performance data, along with log and core data, was used to delineate consistent, continuous reservoir characteristics in core areas of the development.

Proved undeveloped locations were included in core areas between known data and adjacent to productive wells. Locations where

a high degree of certainty could not be demonstrated using the above technologies and techniques, were not categorised as proved.

Proved reserve estimates were attributed to future development projects only where there is a significant commitment to project funding and execution, and for which applicable government and regulatory approvals have been secured or are reasonably certain to be secured. Furthermore, estimates of proved reserves include only volumes for which access to market is assured with reasonable certainty. All proved reserve estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities, or from changes

in economic factors, including product prices, contract terms or development plans.

reserve estimates contained in this section have been estimated with deterministic methodology, with the exception of the North West Shelf gas operation in Australia, where probabilistic methodology has been utilised to estimate and aggregate reserves for the reservoirs dedicated to the gas project only. The probabilistic based portion

of these reserves totals 30 MMboe (total boe conversion is based

on the following: 6,000 scf of natural gas equals 1 boe) and represents approximately one per cent of our total reported proved reserves.

Aggregation of proved reserves beyond the field/project level has been performed by arithmetic summation. Due to portfolio effects, aggregates of proved reserves may be conservative. The custody transfer point(s) or point(s) of sale applicable for each field or project are the reference point for reserves. The reserves replacement ratio is the reserves change during the year before production, divided by the production during the year stated as a percentage.

The Petroleum reserves Group (PrG) is a dedicated group that provides oversight of the reserves’ assessment and reporting processes. It is independent of the various asset teams directly responsible for development and production activities. The PrG

is staffed by individuals averaging more than 25 years’ experience in the oil and gas industry. The manager of the PrG, Abhijit Gadgil,

is a full-time employee of BHP Billiton and is the individual responsible for overseeing and supervising the preparation of the reserve estimates and compiling the information for inclusion in this Annual report. He has an advanced degree in engineering and more than 30 years of diversified industry experience in reservoir engineering, reserves assessment, field development and technical management and is a 30-year member of the Society of Petroleum Engineers (SPE). He has also served on the Society of Petroleum Engineers

Oil and Gas reserves Committee. Mr Gadgil has the qualifications and experience required to act as a qualified petroleum reserves evaluator under the Australian Securities Exchange (ASX) Listing rules. The estimates of petroleum reserves are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr Gadgil and he has reviewed and agrees with the information included in section 2.3.1 of this Annual report and has given his prior written consent for its publication. No part of the individual compensation for members of the PrG is dependent on reported reserves.

2.3.1 Petroleum reserves continued

Petroleum’s reserves are estimated as of 30 June 2014. reserve assessments for all Petroleum operations were conducted by technical staff within the operating organisation. These individuals meet

the professional qualifications outlined by the Society of Petroleum Engineers, are trained in the fundamentals of SEC reserves reporting and the reserves processes and are endorsed by the PrG. Each reserve assessment is reviewed annually by the PrG to ensure technical quality, adherence to internally published Petroleum guidelines

and compliance with SEC reporting requirements. Once endorsed by the PrG, all reserves receive final endorsement by senior management and the risk and Audit Committee prior to public reporting. Our internal Group risk Assessment and Assurance provides secondary assurance of the oil and gas reserve reporting processes through annual audits.

Production for FY2014 totalled 246 MMboe in sales, which is

an increase of 10 MMboe from FY2013. There were an additional 6 MMboe in non-sales production, primarily for fuel consumed in our Petroleum operations. During FY2014, Petroleum added

a total of 131 MMboe of proved oil and gas reserves. Excluding net purchases and sales of negative 14 MMboe, proved additions

of 145 MMboe replaced 58 per cent of production sales and fuel through extensions, discoveries, and revisions. At 30 June 2014, approximately 47 per cent of our proved reserves were in conventional assets, while approximately 53 per cent were

in unconventional assets.

New additions from extensions and discoveries totalled 368 MMboe, primarily for new development projects in the North American shale fields where areas with high liquids production and greater value are being targeted. The Eagle Ford shale area contributed 157 MMboe to these new additions, while the Haynesville and Fayetteville areas contributed 131 MMboe. revisions were negative 222 MMboe and are primarily related to deferral of drilling and adjustments to predicted well performance in undeveloped areas of the Eagle Ford, Permian, Haynesville and Fayetteville areas. The locations of the wells where drilling has been deferred are in relatively dry gas

4

Remuneration Report

5

Directors’ Report

areas and are now planned to be drilled in more than five years’ time, as a result of our refocused drilling plans, and have been reclassified out of proved undeveloped reserves. None of the current unconventional proved undeveloped reserves will be more than five years old at the time they are drilled.

Our proved additions through extensions and revisions for conventional assets excluding purchases and sales totalled 83 MMboe in FY2014. Strong production performance in Macedon and other fields, and the Pyrenees Phase III infill project allowed the addition of 42 MMboe in our Australian operated fields while the non-operated joint interest Bass Strait and North West Shelf fields added 6 MMboe. Our US Gulf of Mexico fields had additions of 16 MMboe from extensions and revisions, while 27 MMboe was added for the extended gas sales project and production performance for the Angostura project in Trinidad and Tobago. During the year, we

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1

Strategic Report

sold our interest in the Liverpool Bay fields in the UK offshore, which reduced proved reserves by 13 MMboe.

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2

Our assets

These results are summarised in the tables below, which detail estimated oil, condensate, NGL and natural gas reserves at 30 June 2014, 30 June 2013 and 30 June 2012, with a reconciliation of the changes in each year. reserves have been calculated using the economic interest method and represent net interest volumes after deduction of applicable royalty. reserves of 75 MMboe are in two production and risk-sharing arrangements that involve the Group in upstream risks and rewards without transfer of ownership

image

3 Corporate Governance Statement

of the products. At 30 June 2014, approximately three per cent of the proved reserves are attributable to those arrangements.


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image



image

2.3.1 Petroleum reserves continued


Millions of barrels

Australia

States

Other (b)

Total

Proved developed and undeveloped oil and condensate reserves (a)





Reserves at 30 June 2011

171.2

257.9

40.8

469.9

Improved recovery

33.2

33.2

revisions of previous estimates

8.7

120.6

5.1

134.4

Extensions and discoveries

8.8

2.9

11.7

Purchase/sales of reserves

32.0

32.0

Production

(31.2)

(30.8)

(9.2)

(71.2)

Total changes

(13.6)

157.8

(4.1)

140.1

Reserves at 30 June 2012

157.6

415.7

36.6

610.0

Improved recovery

12.6

0.1

12.7

revisions of previous estimates

13.7

(65.7)

1.1

(50.9)

Extensions and discoveries

0.2

137.5

0.2

137.9

Purchase/sales of reserves

(1.9)

(1.9)

Production

(25.9)

(38.7)

(7.9)

(72.5)

Total changes

(12.0)

43.8

(6.5)

25.4

Reserves at 30 June 2013

145.7

459.6

30.1

635.4

Improved recovery

revisions of previous estimates

14.2

(50.0)

(0.4)

(36.1)

Extensions and discoveries

99.0

0.3

99.3

Purchase/sales of reserves

(0.4)

(3.5)

(3.9)

Production

(23.6)

(54.0)

(6.5)

(84.1)

Total changes

(9.4)

(5.4)

(10.0)

(24.8)

Reserves at 30 June 2014

136.2

454.2

20.1

610.5

Developed





Proved developed oil and condensate reserves





as of 30 June 2011

116.0

92.2

38.5

246.7

as of 30 June 2012

101.5

148.6

36.5

286.6

as of 30 June 2013

105.0

209.5

27.7

342.2

Developed Reserves as of 30 June 2014

96.5

237.8

14.7

349.0

Undeveloped





Proved undeveloped oil and condensate reserves





as of 30 June 2011

55.2

165.7

2.2

223.1

as of 30 June 2012

56.2

267.1

0.1

323.4

as of 30 June 2013

40.6

250.1

2.5

293.2

Undeveloped Reserves as of 30 June 2014

39.7

216.4

5.4

261.5

(a) Small differences are due to rounding to first decimal place.





United


(b) Other is comprised of Algeria, Pakistan, Trinidad and Tobago, and the United Kingdom.

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2.3.1 Petroleum reserves continued


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1

Strategic Report

United

Millions of barrels Australia States Other (c) Total

image

Proved developed and undeveloped NGL reserves (a)

Reserves at 30 June 2011 102.9 9.6 0.7 113.2

image

Improved recovery – 0.9 – 0.9

revisions of previous estimates 0.2 49.7 (0.1) 49.9

Extensions and discoveries – 2.1 – 2.1

Purchase/sales of reserves – 41.9 – 41.9

Production (b) (7.9) (5.7) (0.4) (14.1)

image

Total changes (7.7) 89.0 (0.5) 80.8

image

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2

Our assets

Reserves at 30 June 2012 95.2 98.6 (d) 0.2 194.0 (d)

image

Improved recovery – 1.0 – 1.0

revisions of previous estimates 3.5 (23.3) – (19.8)

Extensions and discoveries 0.1 82.2 – 82.3

Purchase/sales of reserves – – – –

Production (b) (7.9) (9.6) – (17.5)

image

Total changes (4.3) 50.3 – 45.9

image

Reserves at 30 June 2013 90.9 148.9 (d) 0.2 239.9 (d)

image

Improved recovery – – – –

revisions of previous estimates (0.3) (25.3) (0.1) (25.7)

Extensions and discoveries – 46.9 – 46.9

image

Purchase/sales of reserves – (0.2) – (0.2)

3 Corporate Governance Statement

Production (b) (8.5) (13.6) – (22.1)

image

Total changes (8.8) 7.7 (0.1) (1.2)

image

Reserves at 30 June 2014 82.1 156.6 (d) – 238.7 (d)

Developed

Proved developed NGL reserves


as of 30 June 2011

60.3

2.6

0.7

63.6

as of 30 June 2012

53.9

22.5

0.2

76.6

as of 30 June 2013

54.7

54.1

0.2

108.9

Developed Reserves as of 30 June 2014

46.0

75.0

121.0

Undeveloped

Proved undeveloped NGL reserves as of 30 June 2011


42.6


7.0


0.1


49.7

as of 30 June 2012

41.3

76.1

117.4

as of 30 June 2013

36.2

94.8

131.0

Undeveloped Reserves as of 30 June 2014

36.1

81.5

117.7

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4

Remuneration Report

  1. Small differences are due to rounding to first decimal place.

  2. Production includes volumes consumed in operations.

  3. Other is comprised of Algeria, Pakistan, Trinidad and Tobago, and the United Kingdom.

    5

    Directors’ Report

  4. For 2012, 2013 and 2014, amounts include 1.7, 4.0 and 3.9 million barrels, respectively that are anticipated to be consumed in operations in the United States.



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image

2.3.1 Petroleum reserves continued


United

Billions of cubic feet

Australia (c)

States

Other (d)

Total

Proved developed and undeveloped natural gas reserves (a)





Reserves at 30 June 2011

4,038.1

2,729.8

735.6

7,503.5

Improved recovery

3.3

3.3

revisions of previous estimates

90.1

328.1

29.1

447.3

Extensions and discoveries

6.6

128.3

134.9

Purchase/sales of reserves

3,297.3

3,297.3

Production (b)

(276.1)

(458.4)

(122.6)

(857.2)

Total changes

(179.5)

3,298.7

(93.5)

3,025.7

Reserves at 30 June 2012

3,858.6 (e)

6,028.5 (f)

642.1(g)

10,529.2 (h)

Improved recovery

3.4

3.4

revisions of previous estimates

34.6

(1,159.5)

(54.9)

(1,179.8)

Extensions and discoveries

8.7

1,675.4

1,684.1

Purchase/sales of reserves

(0.5)

(0.5)

Production (b)

(299.3)

(491.3)

(116.3)

(906.9)

Total changes

(255.9)

27.4

(171.2)

(399.7)

Reserves at 30 June 2013

3,602.6 (e)

6,055.9 (f)

471.0 (g)

10,129.5 (h)

Improved recovery

revisions of previous estimates

207.9

(1,174.3)

3.4

(962.9)

Extensions and discoveries

1,205.9

123.6

1,329.5

Purchase/sales of reserves

(1.5)

(58.4)

(59.9)

Production (b)

(315.2)

(462.7)

(96.9)

(874.8)

Total changes

(107.2)

(432.4)

(28.4)

(568.0)

Reserves at 30 June 2014 3,495.4 (e)

5,623.5 (f)

442.6 (g)

9,561.5 (h)

Developed





Proved developed natural gas reserves





as of 30 June 2011

1,754.0

1,122.1

719.9

3,596.0

as of 30 June 2012

1,619.0

2,742.5

634.5

4,996.0

as of 30 June 2013

2,674.4

3,094.3

471.0

6,239.7

Developed Reserves as of 30 June 2014

2,553.7

3,208.3

315.5

6,077.5

Undeveloped





Proved undeveloped natural gas reserves





as of 30 June 2011

2,284.1

1,607.7

15.7

3,907.4

as of 30 June 2012

2,239.6

3,286.0

7.6

5,533.2

as of 30 June 2013

928.2

2,961.6

3,889.8

Undeveloped Reserves as of 30 June 2014

941.7

2,415.2

127.1

3,484.0

  1. Small differences are due to rounding to first decimal place.

  2. Production includes volumes consumed by operations.

  3. Production for Australia includes gas sold as LNG.

  4. Other is comprised of Algeria, Pakistan, Trinidad and Tobago, and the United Kingdom.

  5. For 2012, 2013 and 2014, amounts include 397, 387 and 360 billion cubic feet, respectively that are anticipated to be consumed in operations in Australia.

  6. For 2012, 2013 and 2014, amounts include 104, 91 and 185 billion cubic feet, respectively that are anticipated to be consumed in operations in the United States.

  7. For 2012, 2013 and 2014, amounts include 65, 49 and 30 billion cubic feet, respectively that are anticipated to be consumed in operations in Other areas.

  8. For 2012, 2013 and 2014, amounts include 566, 527 and 575 billion cubic feet, respectively that are anticipated to be consumed in operations.

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1

Strategic Report

Millions of barrels of oil equivalent (a)

Australia

United States

Other (d)

Total

Proved developed and undeveloped oil, condensate,





Reserves at 30 June 2011

947.2

722.4

164.1

1,833.7

Improved recovery

34.7

34.7

revisions of previous estimates

23.9

225.0

9.9

258.8

Extensions and discoveries

9.9

26.4

36.3

Purchase/sales of reserves

623.5

623.5

Production (c)

(85.1)

(113.0)

(30.1)

(228.2)

Total changes

(51.3)

796.6

(20.2)

725.2

Reserves at 30 June 2012

895.9 (e)

1,519.0 (f)

143.9 (g)

2,558.8 (h)

Improved recovery

14.2

14.2

revisions of previous estimates

23.0

(282.3)

(8.1)

(267.3)

Extensions and discoveries

1.8

498.9

0.2

500.9

Purchase/sales of reserves

(2.0)

(2.0)

Production (c)

(83.7)

(130.2)

(27.3)

(241.2)

Total changes

(59.0)

98.7

(35.1)

4.7

Reserves at 30 June 2013

837.0 (e)

1,617.7 (f)

108.8 (g)

2,563.5 (h)

Improved recovery

revisions of previous estimates

48.6

(271.0)

0.1

(222.4)

Extensions and discoveries

346.8

20.9

367.7

Purchase/sales of reserves

(0.9)

(13.2)

(14.1)

Production (c)

(84.6)

(144.7)

(22.6)

(251.9)

Total changes

(36.1)

(69.7)

(14.9)

(120.6)

Reserves at 30 June 2014

800.9 (e)

1,548.0 (f)

93.9 (g)

2,442.8 (h)

Developed





Proved developed oil, condensate, natural gas and NGL reserves





as of 30 June 2011

468.6

281.9

159.2

909.7

as of 30 June 2012

425.1

628.2

142.5

1,195.8

as of 30 June 2013

605.5

779.2

106.3

1,491.0

Developed Reserves as of 30 June 2014

568.1

847.6

67.3

1,483.0

Undeveloped





Proved undeveloped oil, condensate, natural gas and NGL reserves





as of 30 June 2011

478.6

440.5

4.9

924.0

as of 30 June 2012

470.8

890.8

1.4

1,363.0

as of 30 June 2013

231.5

838.5

2.5

1,072.5

Undeveloped Reserves as of 30 June 2014

232.8

700.4

26.6

959.8

2.3.1 Petroleum reserves continued

image


image

2

Our assets

natural gas and NGL reserves (b)



image


image

3 Corporate Governance Statement

4

Remuneration Report

  1. Barrel oil equivalent conversion based on 6,000 scf of natural gas equals 1 boe.

  2. Small differences are due to rounding to first decimal place.

  3. Production includes volumes consumed by operations.

  4. Other is comprised of Algeria, Pakistan, Trinidad and Tobago and the United Kingdom.

  5. For 2012, 2013 and 2014, amounts include 66, 64 and 60 million barrels equivalent, respectively that are anticipated to be consumed in operations in Australia.

  6. For 2012, 2013 and 2014, amounts include 19, 19 and 35 million barrels equivalent, respectively that are anticipated to be consumed in operations in the United States.

  7. For 2012, 2013 and 2014, amounts include 11, 8 and 5 million barrels equivalent, respectively that are anticipated to be consumed in operations in Other areas.

    5

    Directors’ Report

  8. For 2012, 2013 and 2014, amounts include 96, 92 and 100 million barrels equivalent, respectively that are anticipated to be consumed in operations.


image



      1. Petroleum reserves continued

        Proved undeveloped reserves

        At 30 June 2014, Petroleum had 960 MMboe of proved undeveloped reserves, of which 604 MMboe, or 63 per cent, resided in our

        North American shale fields, while 356 MMboe or 37 per cent resided primarily in our offshore conventional fields in Australia, the Gulf of Mexico and the Caribbean. Compared to the total proved undeveloped of 1,072 MMboe reported at 30 June 2013, this represents a net reduction of 112 MMboe in proved undeveloped reserves during the year. This reduction was the combined result

        of development activities that converted proved undeveloped reserves into proved developed, the addition of new North American shale drilling locations, as well as revisions to the proved undeveloped reserves previously reported at 30 June 2013. Our active development program successfully drilled and converted 190 MMboe from proved undeveloped reserves to proved developed reserves during the year. Development activities in our North American shale fields converted 132 MMboe of this amount, while 34 MMboe of proved undeveloped were converted into proved developed in the Atlantis field in the Gulf of Mexico, with the remaining 20 MMboe of conversions in

        the Pyrenees, Macedon and Minerva fields in Australia.

        New additions to proved undeveloped reserves through extensions to existing proven acreage for new planned drilling locations totalled 280 MMboe. Of this amount, 218 MMboe was added in our North American Shale fields for new planned wells, which will be fully drilled within the next five years. Other extensions totalling 41 MMboe occurred in the Atlantis and Mad Dog fields in the

        US Gulf of Mexico, with the remaining 21 MMboe for the Angostura field Phase III expansion in Trinidad and Tobago. Offsetting these new additions were revisions which reduced proved undeveloped reserves by 203 MMboe. Virtually all of these revisions were in our North American shale fields and resulted from refocusing of our drilling program to target the most productive and highest value drilling locations. This resulted in the deferral of planned drilling

        for selected locations beyond our five-year plan and reclassification of the related volumes from proved undeveloped into non-proved categories. Technical adjustments reflecting observed well performance also contributed to this reduction.

        Of the 960 MMboe currently classified as proved undeveloped at 30 June 2014, 210 MMboe has been reported for five or more years. All of this amount is in our offshore conventional fields

        that are currently producing or being actively pursued, which are scheduled to start producing within the next five years. The largest component of this is 128 MMboe in the Kipper-Tuna-Turrum project in Bass Strait, Australia. This project is expected to be on production in 2016. The Atlantis field in the Gulf of Mexico contains 39 MMboe, which is actively being drilled. The remainder resides in other Australian offshore fields that have active development plans.

        Our North American shale fields do not contain any proved undeveloped reserves reported for five or more years. In addition, management plans anticipate drilling all the proved undeveloped reserves in the North American shale fields in the next five years, with none of the proved undeveloped reserves being more than five years old at the time they are drilled.

        During FY2014, Petroleum continued timely development of our inventory of proved undeveloped projects by converting 190 MMboe to proved developed reserves. Over the past three years, the conversion of proved undeveloped to developed has totalled

        585 MMboe, averaging 195 MMboe per year. In currently producing conventional fields, the remaining proved undeveloped reserves will be developed and brought on stream in a phased manner

        to best optimise the use of production facilities and to meet sales commitments. During FY2014, Petroleum spent US$6.1billion

        on development activities worldwide.


      2. Mineral Resources and Ore Reserves

        The statement of Mineral resources and Ore reserves (including Coal resources and Coal reserves) presented in this Annual report has been produced in accordance with the Australian Securities Exchange (ASX) Listing rules Chapter 5 and the Australasian Code for reporting of Exploration results, Mineral resources and Ore reserves, December 2012 (the JOrC Code). Commodity prices and exchange rates used to estimate the economic viability of reserves are based on asset-defined or BHP Billiton long-term forecasts.

        The Ore reserves tabulated are held within existing, permitted mining tenements. The Group’s mineral leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all reserves on the leased properties to be mined in accordance with current production schedules. Our Ore reserves may include areas where some additional approvals remain outstanding, but where, based on the technical investigations we carry out as part of our planning process, and our knowledge and experience of the approvals process, we expect that such

        approvals will be obtained as part of the normal course of business and within the time frame required by the current schedule.

        The information in this Annual report relating to Mineral resources and Ore reserves is based on information compiled by Competent Persons (as defined in the JOrC Code). All Competent Persons have, at the time of reporting, sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity they are undertaking to qualify as a Competent Person

        as defined by the JOrC Code. At the reporting date, each Competent Person listed in this Annual report is a full-time employee of

        BHP Billiton or a company in which BHP Billiton has a controlling interest or has joint control, unless otherwise noted. Each Competent Person consents to the inclusion in this Annual report of the matters based on their information in the form and context

        in which it appears.

        All of the Mineral resource and Ore reserve figures presented are reported in 100 per cent terms and represent estimates

        at 30 June 2014 (unless otherwise stated). All tonnes are reported as dry metric tonnes (unless otherwise stated). All tonnes and grade information has been rounded, hence small differences may be present in the totals. All of the Mineral resource information is inclusive of Mineral resources that have been converted to Ore

        reserves (i.e. Mineral resources are not additional to Ore reserves). The information contained herein differs in certain respects from that reported to the US Securities and Exchange Commission (SEC), which is prepared with reference to the SEC’s Industry Guide 7.

        BHP Billiton applies governance arrangements and internal controls to verify the estimates and estimation process for Mineral resources and Ore reserves. These include:

        • standard company procedures for public reporting aligned with current regulatory requirements;

        • independent audits of new and materially changed estimates;

        • annual reconciliation performance metrics to validate reserves estimates for operating mines;

        • internal technical audits of resources and reserves estimates for each asset are scheduled every two years.

          Group resource and Business Optimisation (rBO) provides governance and functional leadership for resource planning and development and Ore reserve reporting to support the above controls.

          Mineral resources and Ore reserves are presented in the accompanying tables.

          Competent Persons

          Copper Business

          Mineral Resources

          Escondida, Pampa Escondida and Pinta Verde: L Soto (MAusIMM), M Cortes (MAusIMM) (employed by Minera Escondida Limitada) Chimborazo: R Turner (MAusIMM, employed by Golder Associates) Cerro Colorado and Spence: M Tapia (MAusIMM)

          Pinto Valley and Pinto Valley Miami unit: J Clark (Soc.MME (SME reg’d), employed by Ajax Ltd)

          Olympic Dam: S O’Connell (MAusIMM)

          Antamina: L Canchis (MAusIMM, employed by Minera Antamina SA) Cannington: B Coutts (MAusIMM)

          Ore Reserves

          Escondida: A Zuzunaga (MAusIMM, employed by Minera Escondida Limitada)

          Cerro Colorado and Spence: R Ramirez (MAusIMM) Pinto Valley: B Baird (MAusIMM)

          Olympic Dam: D Grant (FAusIMM)

          Antamina: L Mamani (MAusIMM, employed by Minera Antamina SA) Cannington: M Dowdell (MAusIMM)

          Iron Ore Business

          Mineral Resources

          WAIO: P Whitehouse (MAusIMM), M Lowry (MAusIMM), M Smith (MAusIMM), D Stephens (MAIG)

          Samarco JV: L Bonfioli (MAusIMM), J P da Silva (MAusIMM) (employed by Samarco Mineração SA)

          Ore Reserves

          WAIO: T Cockerill (MAusIMM), B Hall (MAusIMM),

          A Neville (MAusIMM), D Blechynden (PEGNL), A Greaves (MAusIMM) Samarco JV: D Nunes (MAusIMM), J P da Silva (MAusIMM) (employed by Samarco Mineração SA)


          Coal Business

          Mineral Resources

          Goonyella Riverside Broadmeadow, Norwich Park and Red Hill: S Martinez (MAusIMM)

          Peak Downs and Peak Downs East: J Centofanti (MAusIMM) Saraji and Saraji East: R Saha (MAusIMM)

          Blackwater and Daunia: R Macpherson (MAIG) Gregory Crinum and Liskeard: J Gale (MAusIMM) South Walker Creek, Poitrel-Winchester,

          Nebo West and Bee Creek: P Handley (MAusIMM)

          Wards Well: S Groenland (MAusIMM)

          Appin, West Cliff, Dendrobium and Cordeaux: H Kaag (MAusIMM) Haju, Lampunut, Luon, Bumbun and

          Juloi Northwest: N Ikhsan (MAusIMM)

          San Juan and Navajo: S Haney (Soc.MME (SME reg’d)) Khutala: G Gemmell (SACNASP), J H Marais (GSSA)

          Wolvekrans and Middelburg: L Visser (SACNASP), J H Marais (GSSA) Klipspruit: P Maseko (SACNASP), J H Marais (GSSA)

          Leandra North, Naudesbank, Weltevreden and Leandra South: N Haniff (SACNASP), J H Marais (GSSA)

          T-Project, Davel and Remainder Block IV: J H Marais (GSSA) Mt Arthur Coal: P Wakeling (MAusIMM)

          Togara South: B Lay (MAusIMM)

          Cerrejón: J Field (MAusIMM), G Hernandez (GSSA, employed by Cerrejón Limited)


          Ore Reserves

          image

          1

          Strategic Report

          Goonyella Riverside Broadmeadow and Gregory Crinum: N Bordia (MAusIMM), D Walker (MAusIMM, employed by Mineplan Pty Ltd)

          Peak Downs: S de la Cruz (MAusIMM) Saraji and Daunia: G Clarete (MAusIMM) Norwich Park: S Thomas (MAusIMM) Blackwater: P Gupta (MAusIMM)

          South Walker Creek and Poitrel-Winchester: D Storey (MAusIMM) Appin, West Cliff and Dendrobium: M Rose (MAusIMM)

          image

          2

          Our assets

          San Juan and Navajo: S Kinsey (Soc.MME (SME reg’d))

          Khutala, Wolvekrans, Middelburg and Klipspruit: I Thomson (SAIMM) Mt Arthur Coal: D Stacey (MAusIMM)

          Cerrejón: G Hernandez (GSSA, employed by Cerrejón Limited)


          Aluminium, Manganese and Nickel Business

          Mineral Resources

          Worsley: J Binoir (MAusIMM), J Engelbrecht (MAusIMM)

          MRN: R Aglinskas (MAusIMM, employed by Mineração Rio do Norte) GAC Project: P Schultz (MAusIMM, employed by Probe Mining) GEMCO: D Hope (MAusIMM)

          Wessels and Mamatwan: E P Ferreira (SACNASP), C Nengovhela (SACNASP)

          image

          3 Corporate Governance Statement

          Cerro Matoso: C A Rodriguez (MAusIMM)

          Leinster and Yakabindie: M Menicheli (MAusIMM), P Soodishoar (MAusIMM), R Otadoy (MAusIMM)

          Mt Keith, Jericho and Venus: M Menicheli (MAusIMM), R Otadoy (MAusIMM)

          Cliffs: M Menicheli (MAusIMM), P Soodishoar (MAusIMM)

          Ore Reserves

          Worsley: G Burnham (MAusIMM)

          MRN: J P de Melo Franco (MAusIMM, employed by Mineração Rio do Norte)

          GEMCO: M Bryant (MAusIMM, employed by Bryant Mining Pty Ltd) Wessels and Mamatwan: D Mathebula (SAIMM)

          Cerro Matoso: F Fuentes (MAusIMM)

          image

          4

          Remuneration Report

          Leinster: U Sandilands (MAusIMM), M Gray (MAusIMM) Mt Keith: U Sandilands (MAusIMM)

          Cliffs: M Gray (MAusIMM), A Torres (MAusIMM)


          Petroleum and Potash Business

          Mineral Resources

          image

          5

          Directors’ Report

          Jansen: J McElroy (MAusIMM), B Nemeth (MAusIMM)


          image

          Copper Business

          image

          Mineral Resources

          As at 30 June 2014

          image

          Deposit

          Ore Type

          Mineral Resources

          Ore Reserves

          Escondida

          Oxide

          Mixed & Sulphide Sulphide Leach


          Concentrator

          0.20%SCu

          0.30%TCu


          0.20%SCu

          0.30%TCu and lower than variable cut-off grade (V_COG) of concentrator – this is a complementary process to concentrators.

          V_COG – mine plans optimised considering financial and technical parameters in order to maximise Net Present Value.

          Pampa Escondida

          Sulphide

          0.30%TCu

          Pinta Verde

          Oxide & Sulphide

          0.30%TCu

          Chimborazo

          Sulphide Leach

          0.30%TCu

          Cerro Colorado

          Oxide & Sulphide

          0.30%TCu

          0.30%TCu

          Spence

          Oxide

          Low-grade Oxide Oxide Low Solubility Supergene Sulphides Transitional Sulphides Sulphide

          ROM

          0.30%TCu

          0.10%TCu

          0.30%TCu

          0.15%TCu

          > 0.20%TCu

          0.30%TCu

          0.30%TCu

          0.30%TCu

          0.10%TCu

          Pinto Valley Miami unit

          In situ Leach

          Olympic Dam

          Non-sulphide Sulphide

          > 0.48g/tAu

          Variable between 0.10%Cu and 0.30%Cu

          Variable between 1.2%Cu and 1.5%Cu

          • 0% TCu

          Measured Resources Indicated Resources

          Commodity

          Deposit (1)

          Ore Type

          Mt

          %TCu

          %SCu

          ppmMo

          g/tAu

          Mt

          %TCu

          %SCu

          ppmMo

          g/tAu

          Copper












          Escondida (2)

          Oxide

          117

          0.80

          62

          0.65


          Mixed

          84

          0.74

          47

          0.50


          Sulphide

          5,150

          0.65

          2,580

          0.52

          Pampa Escondida

          Sulphide

          294

          0.53

          0.07

          1,150

          0.55

          0.10

          Pinta Verde

          Oxide

          109

          0.60

          64

          0.53


          Sulphide

          23

          0.50

          Chimborazo

          Sulphide Leach

          139

          0.50

          Cerro Colorado (3)

          Oxide

          67

          0.61

          0.43

          140

          0.59

          0.39


          Sulphide

          53

          0.68

          0.12

          82

          0.62

          0.11

          Spence

          Oxide

          49

          0.85

          0.53

          6.7

          0.73

          0.51


          Low-grade Oxide

          7.0

          0.26

          56

          0.24


          Supergene Sulphides

          145

          0.92

          50

          0.59


          Transitional Sulphides

          24

          0.75

          3.5

          0.51


          Sulphide

          515

          0.47

          196

          795

          0.45

          135

          Pinto Valley (4)

          Sulphide


          Low-grade Leach

          Pinto Valley Miami unit

          In situ Leach

          174

          0.31

          40

          0.32

          Copper Uranium


          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg

          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg

          Olympic Dam (5)

          Non-sulphide

          52

          0.97

          195

          0.81


          Sulphide

          1,220

          0.99

          0.30

          0.38

          2

          4,480

          0.82

          0.25

          0.30

          2

          Copper Zinc


          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo

          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo

          Antamina (6)

          Sulphide Cu only

          171

          0.89

          0.14

          8

          350

          518

          0.86

          0.15

          8

          250


          Sulphide Cu-Zn

          68

          0.97

          1.77

          16

          120

          309

          0.92

          1.74

          14

          70

          Silver Lead Zinc


          Mt

          g/tAg

          %Pb

          %Zn


          Mt

          g/tAg

          %Pb

          %Zn


          Cannington (7)

          OC Sulphide

          15

          70

          3.04

          2.12


          1.2

          67

          2.64

          1.32



          UG Sulphide

          42

          226

          6.18

          3.86


          11

          147

          4.51

          3.04


          (1) Cut-off grades:

























































































































          image

          image

          image

          1

          Strategic Report

          2

          Our assets

          As at 30 June 2013



          Inferred Resources

          Total Resources

          BHP Billiton

          Interest

          %

          Total Resources

          Mt

          %TCu

          %SCu

          ppmMo

          g/tAu

          Mt

          %TCu

          %SCu

          ppmMo

          g/tAu

          Mt

          %TCu

          %SCu

          ppmMo


          36

          0.58

          215

          0.72

          57.5

          221

          0.71

          75

          0.44

          206

          0.58


          231

          0.59

          10,200

          0.51

          17,900

          0.55


          13,890

          0.57

          6,000

          0.43

          0.04

          7,440

          0.45

          0.05

          57.5

          7,444

          0.45

          15

          0.54

          188

          0.57

          57.5

          188

          0.57

          37

          0.45

          60

          0.47


          60

          0.47

          84

          0.60

          223

          0.54

          57.5

          223

          0.54

          30

          0.60

          0.37

          237

          0.60

          0.40

          100

          267

          0.60

          0.42

          28

          0.60

          0.12

          163

          0.64

          0.11


          189

          0.63

          0.12

          56

          0.84

          0.53

          100

          57

          0.88

          0.56

          26

          0.17

          89

          0.22


          144

          0.21

          4.0

          0.49

          199

          0.83


          197

          0.84

          28

          0.72


          32

          0.66

          1,010

          0.39

          80

          2,320

          0.43

          125


          2,368

          0.43

          130

          565

          0.39


          379

          0.18

          214

          0.31

          100

          214

          0.31

          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg

          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg

          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg

          36

          0.79

          283

          0.84

          100

          364

          0.75

          3,850

          0.73

          0.25

          0.24

          1

          9,550

          0.81

          0.26

          0.29

          2


          9,570

          0.82

          0.26

          0.31

          1

          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo

          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo


          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo

          620

          0.70

          0.10

          7

          180

          1,310

          0.79

          0.13

          8

          230

          33.75

          1,466

          0.84

          0.09

          9

          240

          400

          1.00

          1.40

          15

          50

          777

          0.97

          1.57

          15

          64


          520

          0.93

          1.79

          15

          80

          Mt

          g/tAg

          %Pb

          %Zn


          Mt

          g/tAg

          %Pb

          %Zn



          Mt

          g/tAg

          %Pb

          %Zn



          16

          70

          3.01

          2.06


          100

          16

          66

          2.83

          1.94


          6.7

          98

          3.52

          2.00


          60

          197

          5.57

          3.50



          80

          184

          5.28

          3.19


          image


          image

          3 Corporate Governance Statement

          4

          Remuneration Report

          Deposit

          Ore Type

          Mineral Resources

          Ore Reserves

          Antamina

          Sulphide Cu only


          Sulphide Cu-Zn

          Net value cut-off incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation at the US$0/hr limit averages 0.25%Cu, 6g/tAg, 62ppmMo and 5,770t/hr mill throughput.


          Net value cut-off incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation at the US$0/hr limit averages 0.11%Cu, 0.71%Zn, 9g/tAg and 5,700t/hr mill throughput.

          Net value incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation

          at the US$6,000/hr limit averages 0.23%Cu, 7g/tAg, 31ppmMo and 5,530t/hr mill throughput.

          Net value incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation

          at the US$6,000/hr limit averages 0.11%Cu, 0.83%Zn, 12g/tAg and 5,760t/hr mill throughput.

          Cannington

          OC Sulphide UG Sulphide

          Net value incorporating material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation at A$45/t averages 27g/tAg, 0.85%Pb and 0.90%Zn.

          Net value incorporating material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation at A$90/t averages 48g/tAg, 1.66%Pb and 2.15%Zn.


          Net value cut-off incorporating material revenue and cost factors and includes metallurgical recovery (see footnote 10 for averages). Mineralisation at A$140/t averages 99g/tAg, 4.40%Pb and 2.82%Zn.

          Antamina and Cannington – All metals used in net value calculations for the Antamina and Cannington Mineral Resources and Ore Reserves are recovered into concentrate (see footnote 10 for averages) and sold.

          1. Escondida – The increase in Mineral Resources and improved resource confidence was mainly due to a revised resource estimate that included

            303,000m of additional drill hole data. This increase was published on 16 April 2014 in the BHP Billiton Operational Review for the Nine Months Ended 31 March 2014, along with Appendix 1 JORC Table 1, and is available to view at image

          2. Cerro Colorado – The decrease in Mineral Resources was due to new and re-interpretation of historical drilling information in areas around the edges of the deposit.

          3. Divestment of Pinto Valley was completed in October 2013.

            image

            5

            Directors’ Report

          4. Olympic Dam – The Non-sulphide Mineral Resources decreased due to lower gold price assumptions.

          5. Antamina – The increase in Mineral Resources was due to an updated resource model as a result of additional drilling.

          6. Cannington – The decrease in Mineral Resources was due to revised economic assumptions.


            image

            Copper Business

            image

            Ore Reserves

            As at 30 June 2014

            image

            Proved Ore Reserves Probable Ore Reserves

            Commodity

            Deposit (1)(8)(9)(10)

            Ore Type

            Mt

            %TCu

            %SCu


            Mt %TCu

            %SCu


            Copper










            Escondida

            Oxide

            92

            0.88


            53 0.67




            Sulphide

            3,540

            0.75


            1,610 0.59




            Sulphide Leach

            1,650

            0.46


            610 0.40



            Cerro Colorado

            Oxide

            30

            0.59

            0.42


            73 0.55

            0.37




            Sulphide

            33

            0.65

            0.13


            29 0.66

            0.11



            Spence

            Oxide

            34

            0.76

            0.53


            2.8 0.77

            0.63




            Oxide Low Solubility

            21

            0.96

            0.44


            12 0.57

            0.22




            Sulphide

            121

            0.96

            0.12


            32 0.64

            0.11




            ROM


            61 0.39

            0.09



            Pinto Valley (4)

            Sulphide


            – –




            Low-grade Leach


            – –



            Copper Uranium


            Mt

            %Cu

            kg/t U3O8

            g/tAu g/tAg

            Mt %Cu

            kg/t U3O8

            g/tAu

            g/tAg

            Olympic Dam (11)

            Sulphide

            129

            1.97

            0.59

            0.72 4

            389 1.82

            0.56

            0.72

            4

            Copper Zinc


            Mt

            %Cu

            %Zn

            g/tAg ppmMo

            Mt %Cu

            %Zn

            g/tAg

            ppmMo

            Antamina

            Sulphide Cu only

            136

            1.00

            0.14

            9 350

            277 0.98

            0.17

            9

            290


            Sulphide Cu-Zn

            53

            1.12

            2.02

            18 90

            207 0.91

            1.86

            14

            70

            Silver Lead Zinc


            Mt

            g/tAg

            %Pb

            %Zn

            Mt g/tAg

            %Pb

            %Zn


            Cannington

            UG Sulphide

            18

            239

            6.38

            3.92

            2.7 240

            6.15

            4.01


          7. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Ore Reserves

            Probable Ore Reserves

            Escondida

            Oxide: 30m x 30m Sulphide: 50m x 50m Sulphide Leach: 60m x 60m

            Oxide: 45m x 45m Sulphide: 90m x 90m

            Sulphide Leach: 115m x 115m

            Cerro Colorado

            70m x 70m on first kriging pass

            120m x 120m on second kriging pass

            Spence

            Oxide: maximum 50m x 50m Sulphide: maximum 75m x 75m

            Oxide and Sulphide: maximum 100m x 100m

            Olympic Dam

            Drilling grid of 20m to 30m

            Drilling grid of 30m to 70m

            Antamina

            30m drill spacing

            55m drill spacing

            Cannington

            12.5m sectional x 15m vertical

            25m sectional x 25m vertical

          8. Ore delivered to process plant.

          9. Metallurgical recoveries for the operations were:

            Deposit

            Metallurgical Recovery

            Escondida

            Oxide: 70%

            Sulphide: 84%

            Sulphide Leach: 32%

            Cerro Colorado

            74% of TCu

            Spence

            Oxide: 73% of TCu

            Oxide Low Solubility: 71% of TCu Sulphide: 72%

            ROM: 30%

            Olympic Dam

            Cu 94%, U3O8 72%, Au 70%, Ag 64%

            Antamina

            Sulphide Cu only: Cu 93%, Zn 0%, Ag 78%, Mo 64%

            Sulphide Cu-Zn: Cu 79%, Zn 80%, Ag 69%, Mo 0%

            Cannington

            Ag 87%, Pb 86%, Zn 79%

          10. Olympic Dam – The decrease in Ore Reserves was due to downgrading of Measured and Indicated Resources resulting in changes to Proved and Probable Reserves. Additional Ore Reserves decrease was due to a revised stope design process.


          image

          image

          image

          1

          Strategic Report

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          As at 30 June 2013



          Total Ore Reserves

          Reserve BHP Billiton Life Interest

          (years) %

          Total Ore Reserves

          Reserve

          Life (years)

          Mt

          %TCu

          %SCu

          Mt

          %TCu

          %SCu



          145

          0.80





          145

          0.81


          5,150

          0.70



          52

          57.5

          5,100

          0.72



          54

          2,260

          0.44





          2,020

          0.44





          103

          0.56

          0.38



          9.0

          100

          113

          0.59

          0.42



          9


          62

          0.65

          0.12





          66

          0.64

          0.13





          37

          0.76

          0.54



          10

          100

          35

          0.79

          0.57



          10


          33

          0.82

          0.36





          38

          0.83

          0.36





          153

          0.90

          0.12





          153

          0.92

          0.12





          61

          0.39

          0.09





          85

          0.35

          0.09







          67

          0.39



          4






          13

          0.21





          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg



          Mt

          %Cu

          kg/t U3O8

          g/tAu

          g/tAg



          518

          1.86

          0.57

          0.72

          4

          47

          100

          619

          1.76

          0.57

          0.74

          3

          56


          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo



          Mt

          %Cu

          %Zn

          g/tAg

          ppmMo



          413

          0.99

          0.16

          9

          310

          13

          33.75

          498

          0.92

          0.11

          9

          290

          14


          260

          0.95

          1.89

          15

          74



          226

          0.96

          2.08

          15

          70



          Mt

          g/tAg

          %Pb

          %Zn




          Mt

          g/tAg

          %Pb

          %Zn




          21

          239

          6.35

          3.93


          9.0

          100

          25

          247

          6.45

          3.81


          11


          image


          image


          image


          image

          Iron Ore Business

          image

          Mineral Resources

          As at 30 June 2014


          Measured Resources Indicated Resources


          image

          Commodity Deposit (1)(2) Ore Type

          Mt

          %Fe

          %P

          %SiO2

          %Al2O3

          %LOI

          Mt

          %Fe

          %P

          %SiO2

          %Al2O3

          %LOI

          Iron Ore

          WAIO (3)(4)(5) BKM


          1,300


          62.2


          0.12


          3.9


          2.4


          4.1


          4,200


          59.9


          0.14


          4.9


          2.5


          6.2

          CID

          960

          56.1

          0.05

          6.4

          2.0

          10.9

          430

          56.7

          0.06

          6.1

          2.1

          10.3

          MM

          360

          61.9

          0.07

          3.2

          1.8

          6.0

          870

          60.7

          0.07

          3.8

          2.1

          6.7

          NIM

          10

          59.0

          0.08

          10.1

          1.2

          3.8

          120

          61.6

          0.06

          8.0

          1.1

          1.7


          Mt

          %Fe

          %Pc




          Mt

          %Fe

          %Pc




          Samarco JV (6) ROM

          3,000

          39.3

          0.05




          2,800

          37.2

          0.05






          image

          Ore Reserves

          As at 30 June 2014

          image

          Proved Ore Reserves Probable Ore Reserves

          Commodity

          Deposit (7)(8)(9)(10)(12) Ore Type

          Mt

          %Fe

          %P

          %SiO2

          %Al2O3

          %LOI

          Mt

          %Fe

          %P

          %SiO2

          %Al2O3

          %LOI

          Iron Ore

          WAIO (3)(4)(11)(13) BKM


          700


          63.7


          0.10


          2.9


          1.9


          3.5


          1,400


          61.5


          0.12


          4.1


          2.3


          5.0

          BKM Bene

          90

          61.3

          0.09

          6.7

          2.7

          1.7

          80

          60.0

          0.09

          8.3

          2.8

          1.8

          CID

          650

          56.3

          0.05

          6.3

          1.8

          10.9

          190

          57.3

          0.05

          5.7

          1.5

          10.4

          MM

          220

          62.1

          0.07

          3.1

          1.7

          5.7

          310

          61.0

          0.07

          3.8

          2.0

          6.2

          NIM

          10

          59.6

          0.06

          10.2

          1.4

          2.5

          20

          60.0

          0.05

          10.1

          1.0

          2.1


          Mt

          %Fe

          %Pc




          Mt

          %Fe

          %Pc




          Samarco JV ROM

          1,800

          40.1

          0.05




          1,100

          38.8

          0.05




          1. The Mineral Resource grades listed refer to in situ mass percentage on a dry weight basis. Wet tonnes are reported for WAIO deposits and Samarco JV, including moisture contents: BKM – Brockman 3%, CID – Channel Iron Deposits 8%, MM – Marra Mamba 4%, NIM – Nimingarra 3.5%, Samarco JV – 6.5%.

          2. A single cut-off value was applied per deposit; however, cut-offs range from 50–57%Fe across the WAIO resource inventory. The cut-off grade applied by Samarco JV was 22%Fe.

          3. WAIO Mineral Resources and Ore Reserves are reported on a Pilbara basis by ore type to align with our production of the Newman Blend lump product which comprises of BKM, BKM Bene and MM ore types, in addition to other lump and fines products. This also reflects our single logistics chain and associated management system and our equalisation of joint venture equity.

          4. WAIO BHP Billiton interest is reported as Pilbara Ore Reserve tonnes weighted average across all Joint Ventures. BHP Billiton ownership varies between 85% and 100%.

          5. WAIO Mineral Resources increased due to additional drilling, updated geological interpretations and new resource models for ten BKM, nine CID

            and seven MM deposits. This resource increase was published on 23 July 2014 in the BHP Billiton Operational Review for the Year Ended 30 June 2014, along with Appendix 1JORC Table 1, and is available to view at image

          6. Samarco JV – The decrease in Mineral Resources was due to the consideration of geotechnical and environmental constraints.

          7. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Ore Reserves

            Probable Ore Reserves

            WAIO

            50m x 50m

            150m x 50m

            Samarco JV

            Maximum 150m x 100m

            Maximum 300m x 200m


            image

            image

            1

            Strategic Report

            As at 30 June 2013



            Inferred Resources

            Total Resources

            BHP Billiton

            Interest

            %

            Total Resources

            Mt

            %Fe

            %P

            %SiO2

            %Al2O3

            %LOI

            Mt

            %Fe

            %P

            %SiO2

            %Al2O3

            %LOI

            Mt

            %Fe

            %P

            %SiO2

            %Al2O3

            %LOI


            9,200

            59.0

            0.14

            5.4

            2.8

            6.6

            15,000

            59.5

            0.14

            5.1

            2.7

            6.3

            88

            13,000

            59.6

            0.14

            5.2

            2.7

            6.1

            790

            54.9

            0.06

            6.6

            3.0

            11.0

            2,200

            55.8

            0.05

            6.4

            2.3

            10.8


            2,400

            55.7

            0.05

            6.4

            2.4

            10.9

            5,100

            59.6

            0.07

            4.5

            2.3

            7.2

            6,400

            59.9

            0.07

            4.3

            2.2

            7.0


            5,400

            59.9

            0.07

            4.4

            2.2

            6.9

            70

            60.5

            0.05

            9.9

            1.2

            1.7

            200

            61.1

            0.06

            8.8

            1.2

            1.8


            190

            61.0

            0.06

            8.9

            1.2

            1.9

            Mt

            %Fe

            %Pc




            Mt

            %Fe

            %Pc





            Mt

            %Fe

            %Pc




            1,700

            36.2

            0.05




            7,500

            37.8

            0.05




            50

            8,000

            37.7

            0.05





            image

            image

            image

            2

            Our assets

            As at 30 June 2013



            Total Ore Reserves

            Reserve BHP Billiton Life Interest

            (years) %


            Mt


            %Fe

            Total Ore Reserves

            %P %SiO2


            %Al2O3


            %LOI

            Reserve

            Life (years)

            Mt

            %Fe

            %P

            %SiO2

            %Al2O3

            %LOI



            2,100

            62.2

            0.12

            3.7

            2.2

            4.5

            16

            88

            2,000

            62.6

            0.11

            3.5

            2.1

            4.3

            17

            170

            60.7

            0.09

            7.5

            2.7

            1.7



            160

            60.6

            0.09

            7.5

            2.9

            1.7


            840

            56.5

            0.05

            6.1

            1.7

            10.8



            950

            56.6

            0.05

            6.2

            1.6

            10.8


            530

            61.5

            0.07

            3.5

            1.9

            6.0



            500

            61.7

            0.07

            3.4

            1.9

            5.9


            30

            59.8

            0.05

            10.2

            1.2

            2.3



            20

            59.9

            0.06

            10.0

            1.2

            2.3



            Mt

            %Fe

            %Pc






            Mt

            %Fe

            %Pc






            2,900

            39.6

            0.05




            39

            50

            3,000

            39.7

            0.05




            40

            image

            3 Corporate Governance Statement

          8. WAIO metallurgical recovery was 100%, except for BKM Bene-Brockman Beneficiated Ore, where recovery was 73% (tonnage basis), Samarco JV recovery was 82% (metal basis).

          9. The Ore Reserve grades listed refer to in situ mass percentage on a dry weight basis. WAIO tonnages represent wet tonnes based on the following moisture contents:

            BKM – 3%, BKM Bene – 3%, CID – 8%, MM – 4%, NIM – 3.5%. For Samarco JV, the Ore Reserve tonnages also represent wet tonnes based on a moisture content of 6.5% for ROM. Iron ore is marketed for WAIO as Lump (direct blast furnace feed) and Fines (sinter plant feed) and for Samarco JV as Fines (sinter plant feed), direct reduction and blast furnace pellets.

          10. Cut-off grades: WAIO 50–58%Fe for all material types; Samarco JV Fe 22%, Pc 0.097% (phosphorous in concentrate) and PPCc 7.7% (LOI in concentrate).

          11. The operations to support NIM ore type are currently on care and maintenance.

          12. Ore delivered to process plant.

            4

            Remuneration Report

            5

            Directors’ Report

          13. WAIO Ore Reserves are all located on State Agreement mining leases that guarantee the right to mine, except Callawa (NIM), which resides on a standard Western Australian mining lease. Across WAIO, State Government approvals (including environmental and heritage clearances) are required before commencing mining operations in a particular area. Included in the Ore Reserves are select areas where one or more approvals remain outstanding, but where, based on the technical investigations carried out as part of the mine planning process and company knowledge and experience of the approvals process, it is expected that such approvals will be obtained as part of the normal course of business and within the time frame required by the current mine schedule.

          image


          image


          image

          Coal Business

          image

          Coal Resources

          As at 30 June 2014

          image

          Measured Resources Indicated Resources

          Commodity Deposit (1)(2)

          Mining

          Method

          Coal Type

          Mt

          %Ash

          %VM

          %S

          Mt

          %Ash

          %VM

          %S

          Metallurgical Coal Queensland Coal CQCA JV











          Goonyella Riverside Broadmeadow

          OC

          Met

          484

          9.5

          23.1

          0.53

          259

          10.6

          22.9

          0.55


          UG

          Met

          96

          8.1

          22.7

          0.51

          673

          10.1

          21.3

          0.53

          Peak Downs (3)

          OC

          Met

          649

          9.9

          20.7

          0.60

          823

          10.2

          21.0

          0.61


          UG

          Met





          51

          9.9

          19.8

          0.56

          Saraji

          OC

          Met

          739

          11.2

          18.7

          0.79

          193

          10.9

          18.5

          0.79

          Norwich Park

          OC

          Met

          221

          9.6

          17.6

          0.66

          128

          9.9

          17.5

          0.71


          UG

          Met





          20

          9.4

          17.4

          0.73

          Blackwater

          OC

          Met/Th

          196

          7.3

          27.2

          0.42

          479

          8.2

          26.5

          0.41


          UG

          Met/Th





          204

          6.4

          27.4

          0.38

          Daunia

          OC

          Met

          99

          8.0

          20.8

          0.36

          52

          8.6

          20.0

          0.32

          Gregory JV











          Gregory Crinum

          OC

          Met

          7.9

          6.0

          33.0

          0.60

          0.7

          5.7

          32.4

          0.63


          UG

          Met

          123

          6.3

          32.9

          0.60

          BHP Billiton Mitsui











          South Walker Creek

          OC

          Met

          234

          10.1

          13.3

          0.31

          164

          10.9

          13.3

          0.31


          UG

          Met

          128

          10.3

          12.9

          0.29

          Poitrel-Winchester

          OC

          Met

          39

          8.8

          22.2

          0.31

          48

          8.9

          22.4

          0.34

          Queensland Coal Undeveloped Resources CQCA JV











          Red Hill (4)

          OC

          Met/Th

          25

          12.4

          19.8

          0.49


          UG

          Met

          649

          10.0

          19.5

          0.52

          Peak Downs East

          UG

          Met

          668

          9.7

          17.5

          0.55

          Saraji East

          OC

          Met

          272

          9.2

          16.5

          0.59

          416

          10.2

          16.8

          0.63


          UG

          Met

          19

          8.9

          16.5

          0.56

          Gregory JV











          Liskeard

          OC

          Met

          5.6

          7.5

          34.6

          2.30

          BHP Billiton Mitsui











          Nebo West

          OC

          Anth

          178

          9.0

          7.5

          0.60

          Bee Creek

          OC

          Met/Th

          55

          8.5

          14.4

          0.42

          Wards Well

          UG

          Met

          1,224

          8.9

          20.7

          0.53

          Illawarra Coal











          Appin

          UG

          Met/Th

          157

          11.2

          23.8

          0.37

          256

          12.6

          24.2

          0.36

          West Cliff

          UG

          Met/Th

          21

          12.3

          21.3

          0.36

          21

          11.9

          20.7

          0.34

          Dendrobium

          UG

          Met/Th

          86

          29.8

          23.7

          0.59

          91

          29.8

          23.1

          0.58

          Cordeaux

          UG

          Met/Th

          5.2

          28.7

          21.1

          0.58

          109

          29.1

          21.5

          0.56

          Indonesia

          Undeveloped Resources











          Haju

          OC

          Met/Th

          11

          4.6

          39.2

          0.98

          2.0

          5.1

          39.0

          0.97

          Lampunut

          OC

          Met

          72

          4.1

          28.6

          0.51

          31

          4.3

          28.5

          0.62


          OC

          Th

          Luon

          OC

          Met/Th


          UG

          Met

          Bumbun

          OC

          Met/Th

          82

          3.5

          17.6

          0.76

          Juloi Northwest

          OC

          Met/Th

          70

          4.0

          26.5

          0.45

          1. For Queensland Coal and Indonesia Undeveloped Resources, Haju, Lampunut, Luon, Bumbun and Juloi Northwest deposits, coal quality is for a potential product on an air-dried basis. The coal quality for Illawarra Coal is for in situ quality on an air-dried basis. Tonnages are on an in situ moisture basis.

          2. The cut-off criteria used were: CQCA JV, Gregory JV, BHP Billiton Mitsui Open Cut mines/deposits 0.5m seam thickness; CQCA JV, Gregory JV,

            BHP Billiton Mitsui Underground deposits 2.0m seam thickness; Illawarra Coal no seam thickness cut-off because the minimum thickness is economic; Haju, Bumbun and Juloi Northwest 3.0m seam thickness at depths < 12:1 bcm/t overburden ratio; Lampunut and Luon 3.0m seam thickness.

          3. Peak Downs – The Coal Resources and Coal Reserves for Caval Ridge are reported as part of Peak Downs.

          4. Red Hill – Increase in Coal Resources was due to additional drilling and an updated model.


          image

          image

          image

          image

          1

          Strategic Report

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          As at 30 June 2013



          Inferred Resources

          Total Resources

          BHP Billiton

          Interest

          %

          Total Resources

          Mt

          %Ash

          %VM

          %S

          Mt

          %Ash

          %VM

          %S

          Mt

          %Ash

          %VM

          %S


          81

          11.6

          24.5

          0.58

          824

          10.0

          23.2

          0.54

          50

          839

          10.0

          22.9

          0.54

          98

          12.2

          22.1

          0.54

          867

          10.1

          21.5

          0.53


          872

          10.1

          21.6

          0.53

          515

          10.5

          21.1

          0.70

          1,987

          10.2

          20.9

          0.63

          50

          2,008

          10.2

          20.9

          0.63

          57

          9.8

          20.0

          0.57

          108

          9.9

          19.9

          0.57


          108

          9.9

          19.9

          0.57

          90

          11.3

          18.7

          0.76

          1,022

          11.2

          18.7

          0.79

          50

          1,038

          11.1

          18.6

          0.78

          116

          10.3

          17.7

          0.76

          465

          9.8

          17.6

          0.70

          50

          465

          9.8

          17.6

          0.70

          22

          9.9

          17.1

          0.65

          42

          9.7

          17.3

          0.69


          42

          9.7

          17.3

          0.69

          669

          8.1

          27.2

          0.42

          1,344

          8.0

          27.0

          0.42

          50

          1,359

          8.0

          26.9

          0.41

          686

          7.4

          27.8

          0.38

          890

          7.2

          27.7

          0.38


          890

          7.2

          27.7

          0.38

          19

          15.2

          19.5

          0.42

          170

          9.0

          20.4

          0.35

          50

          175

          8.7

          20.5

          0.35






          8.6


          6.0


          33.0


          0.60


          50


          8.6


          6.0


          33.0


          0.60

          0.3

          7.1

          31.5

          0.62

          123

          6.3

          32.9

          0.60


          130

          6.3

          32.9

          0.60


          48


          11.8


          13.6


          0.32


          446


          10.6


          13.3


          0.31


          80


          463


          10.5


          13.3


          0.32

          109

          10.5

          13.5

          0.31

          237

          10.4

          13.2

          0.30


          231

          10.4

          13.2

          0.30

          57

          9.3

          22.3

          0.32

          144

          9.0

          22.3

          0.32

          80

          144

          9.0

          22.2

          0.31






          25


          12.4


          19.8


          0.49



          25


          12.4


          19.8


          0.49

          547

          8.7

          20.4

          0.50

          1,196

          9.5

          19.9

          0.51

          50

          703

          9.2

          19.1

          0.51

          104

          9.7

          18.4

          0.55

          772

          9.7

          17.7

          0.55

          50

          772

          9.7

          17.7

          0.55

          862

          11.9

          17.7

          0.73

          1,550

          10.9

          17.2

          0.68

          50

          1,550

          10.9

          17.2

          0.68

          78

          9.0

          16.5

          0.57

          97

          9.0

          16.5

          0.57


          97

          9.0

          16.5

          0.57






          5.6


          7.5


          34.6


          2.30


          50


          5.6


          7.5


          34.6


          2.30






          178


          9.0


          7.5


          0.60


          80


          178


          9.0


          7.5


          0.60

          5.1

          8.5

          13.0

          0.42

          60

          8.5

          14.3

          0.42

          80

          60

          8.5

          14.2

          0.42

          149

          9.3

          20.1

          0.53

          1,373

          8.9

          20.6

          0.53

          80

          1,373

          9.0

          20.6

          0.50


          289


          13.5


          23.8


          0.36


          702


          12.7


          24.0


          0.36


          100


          706


          12.7


          24.0


          0.36

          68

          13.9

          19.9

          0.33

          110

          13.3

          20.3

          0.34

          100

          113

          13.2

          20.4

          0.34

          118

          29.4

          22.8

          0.58

          295

          29.6

          23.2

          0.58

          100

          301

          29.4

          23.2

          0.58

          85

          29.0

          22.1

          0.57

          199

          29.0

          21.8

          0.57

          100

          199

          28.9

          21.9

          0.57


          1.0


          4.6


          39.0


          0.89


          14


          4.7


          39.2


          0.98


          75


          14


          4.7


          39.2


          0.98

          6.7

          4.3

          28.5

          0.71

          110

          4.2

          28.5

          0.55

          75

          110

          4.2

          28.5

          0.55

          10

          10


          10

          80

          3.6

          18.7

          0.72

          80

          3.6

          18.7

          0.72

          75

          80

          3.6

          18.7

          0.72

          60

          3.4

          18.8

          0.56

          60

          3.4

          18.8

          0.56


          60

          3.4

          18.8

          0.56

          105

          3.5

          17.7

          0.77

          187

          3.5

          17.7

          0.76

          75

          187

          3.5

          17.7

          0.76

          740

          4.2

          27.0

          0.51

          810

          4.2

          26.9

          0.50

          75

          810

          4.2

          26.9

          0.50

          image


          image


          image

          image

          image

          Coal Business Coal Reserves As at 30 June 2014


          Deposit (4)(5)(6)(7)(8)

          Method

          Type

          Mt

          Mt

          Mt

          Mt

          %Ash

          %VM

          %S

          Mt

          %Ash

          %VM

          %S

          Metallurgical Coal Queensland Coal CQCA JV














          Goonyella Riverside

          OC

          Met

          321

          224

          545

          244

          9.3

          22.7

          0.50

          160

          10.5

          22.7

          0.50

          Broadmeadow

          UG

          Met

          43

          160

          203

          35

          8.0

          23.0

          0.52

          109

          9.3

          23.6

          0.54

          Peak Downs (3)

          OC

          Met

          492

          548

          1,040

          296

          10.6

          22.3

          0.60

          317

          10.3

          21.9

          0.59

          Saraji

          OC

          Met

          386

          153

          539

          240

          10.6

          18.0

          0.60

          87

          10.6

          18.5

          0.70

          Norwich Park (9)

          OC

          Met

          154

          76

          230

          112

          10.3

          16.9

          0.70

          52

          10.3

          16.9

          0.70

          Blackwater (10)

          OC

          Met/Th

          143

          379

          522

          126

          8.0

          26.7

          0.40

          333

          9.1

          26.1

          0.40

          Daunia (11)

          OC

          Met

          88

          50

          138

          72

          8.2

          20.8

          0.36

          40

          8.4

          20.5

          0.34

          Gregory JV














          Gregory Crinum (9)

          OC

          Met

          6.6

          0.3

          6.9

          5.4

          7.0

          34.8

          0.60

          0.2

          7.0

          35.3

          0.60


          UG

          Met

          13

          13

          11

          7.2

          33.8

          0.58

          BHP Billiton Mitsui














          South Walker Creek (12)

          OC

          Met

          68

          21

          89

          50

          9.0

          14.3

          0.32

          15

          9.0

          13.9

          0.31

          Poitrel-Winchester (13)

          OC

          Met

          34

          38

          72

          23

          8.3

          23.3

          0.33

          26

          8.3

          24.0

          0.34

          Illawarra Coal














          Appin

          UG

          Met/Th

          24

          133

          157

          20

          8.9

          23.5

          0.37

          112

          8.9

          24.9

          0.36

          West Cliff

          UG

          Met/Th

          5.4

          0.4

          5.8

          3.8

          8.9

          20.6

          0.36

          0.3

          8.9

          20.1

          0.36

          Dendrobium

          UG

          Met/Th

          21

          24

          45


          UG

          Met

          8.6

          9.7

          23.8

          0.59

          9.9

          9.7

          24.2

          0.59


          UG

          Th

          5.2

          23.0

          6.3

          23.0

          Commodity


          Mining


          Coal


          Proved Coal Reserves


          Probable Coal Reserves


          Total Coal

          Reserves Proved Marketable Coal Reserves Probable Marketable Coal Reserves


          (4) Only geophysically logged, fully analysed cored holes with greater than 95% recovery were used to classify the reserves. Drill hole spacings vary between seams and geological domains and were determined in conjunction with geostatistical analyses where applicable. The range of maximum spacings was:

          Deposit

          Proved Coal Reserves

          Probable Coal Reserves

          Goonyella Riverside Broadmeadow

          500m to 1,000m plus 3D seismic coverage for UG

          1,000m to 2,050m

          Peak Downs

          500m to 1,050m

          500m to 2,100m

          Saraji

          500m to 1,040m

          900m to 2,100m

          Norwich Park

          500m to 1,400m

          1,000m to 2,800m

          Blackwater

          500m

          500m to 1,000m

          Daunia

          500m to 1,000m

          1,000m to 2,000m

          Gregory Crinum

          850m plus 3D seismic coverage for UG

          850m to 1,700m

          South Walker Creek

          500m to 800m

          1,000m to 1,500m

          Poitrel-Winchester

          300m to 950m

          550m to 1,850m

          Appin

          700m

          1,500m

          West Cliff

          700m

          1,500m

          Dendrobium

          700m

          1,500m


          image

          image

          image

          image

          image

          1

          Strategic Report

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          Deposit

          Product Recovery

          Goonyella Riverside Broadmeadow

          73%

          Peak Downs

          Peak Downs: 62%

          Caval Ridge: 56%

          Saraji

          61%

          Norwich Park

          71%

          Blackwater

          88%

          Daunia

          80%

          Gregory Crinum

          83%

          South Walker Creek

          73%

          Poitrel-Winchester

          67%

          Appin

          84%

          West Cliff

          71%

          Dendrobium

          67%

          As at 30 June 2013




          Total Marketable Coal Reserves


          Reserve BHP Billiton Life Interest

          (years) %


          Total Marketable Coal Reserves


          Reserve

          Life (years)

          Mt

          %Ash

          %VM

          %S

          Mt

          %Ash

          %VM

          %S


          404

          9.8

          22.7

          0.50

          30

          50

          417

          9.8

          22.7

          0.50

          32

          144

          9.0

          23.4

          0.54



          146

          7.0

          24.2

          0.52


          613

          10.5

          22.1

          0.60

          34

          50

          626

          10.5

          22.1

          0.60

          34

          327

          10.6

          18.1

          0.63

          37

          50

          336

          10.6

          18.1

          0.63

          39

          164

          10.3

          16.9

          0.70

          27

          50

          164

          10.3

          16.9

          0.70

          27

          459

          8.8

          26.3

          0.40

          30

          50

          472

          8.8

          26.3

          0.40

          35

          112

          8.3

          20.7

          0.35

          25

          50

          116

          8.2

          20.7

          0.36

          32


          5.6


          7.0


          34.8


          0.60


          2.8


          50


          5.6


          7.0


          34.8


          0.60


          3

          11

          7.2

          33.8

          0.58



          14

          7.5

          33.7

          0.60



          65


          9.0


          14.2


          0.32


          11


          80


          85


          9.0


          14.3


          0.30


          21

          49

          8.3

          23.6

          0.33

          15

          80

          48

          8.5

          23.6

          0.30

          17


          132


          8.9


          24.7


          0.36


          25


          100


          134


          8.9


          24.7


          0.36


          26

          4.1

          8.9

          20.6

          0.36

          2.0

          100

          5.8

          8.9

          20.7

          0.36

          3

          8.9

          100

          10

          18

          9.7

          24.0

          0.59



          20

          9.7

          24.0

          0.59


          12

          23.0



          13

          23.0



          image


          image

          image

          Coal Business Coal Resources As at 30 June 2014


          Mining


          Coal


          Measured Resources Indicated Resources

          image

          KCal/kg


          KCal/kg

          Commodity Deposit (1)(2)

          Energy Coal New Mexico San Juan (3)

          Method


          UG

          Type


          Th

          Mt


          90

          %Ash


          19.5

          %VM


          %S


          1.09

          CV


          5,630

          Mt


          43

          %Ash


          18.3

          %VM


          %S


          0.76

          CV


          5,740

          Navajo (4)

          OC

          Th

          South Africa













          Khutala (5)

          OC & UG

          Met


          OC

          Th

          1,143

          31.5

          22.3

          1.16

          4,790


          UG

          Th

          188

          33.7

          20.5

          0.88

          4,480

          Wolvekrans

          OC

          Th

          496

          25.9

          23.2

          1.16

          5,600

          18

          30.0

          22.7

          1.02

          5,100

          Middelburg

          OC

          Th

          211

          28.0

          21.7

          1.04

          5,410

          Klipspruit (6)

          OC

          Th

          138

          27.6

          22.4

          1.23

          5,220

          South Africa Projects













          Leandra North

          UG

          Th

          210

          27.7

          23.1

          1.30

          4,990

          194

          27.3

          23.4

          1.24

          5,030

          Naudesbank

          OC & UG

          Th

          103

          25.4

          25.4

          1.09

          5,550

          132

          24.9

          25.5

          1.06

          5,610

          Weltevreden

          OC & UG

          Th

          192

          29.2

          22.1

          1.30

          5,150

          212

          31.1

          21.7

          1.14

          4,970

          South Africa Miscellaneous













          Leandra South (7)

          UG

          Th

          10

          28.1

          20.8

          0.93

          4,700

          132

          27.1

          22.0

          1.02

          4,910

          T-Project (8)

          UG

          Th

          Davel

          UG

          Th

          Remainder Block IV (9)

          UG

          Th

          Australia













          Mt Arthur Coal

          OC

          Th

          863

          20.9

          30.1

          0.65

          6,050

          2,169

          21.4

          29.0

          0.53

          6,100

          Australia Project













          Togara South (10)

          UG

          Th

          719

          12.1

          29.6

          0.31

          6,700

          177

          13.5

          28.9

          0.31

          6,500

          Colombia













          Cerrejón (11)

          OC

          Th

          2,885

          3.7

          35.1

          0.50

          6,590

          988

          3.6

          34.5

          0.50

          6,500

          1. Tonnages are reported as in situ, except for South Africa, South Africa Projects and South Africa Miscellaneous, where tonnages are reported on an air-dried basis. Qualities are reported on an air-dried in situ basis.

          2. Cut-off criteria:

            Deposit

            Coal Resources

            Coal Reserves

            San Juan

            3.0m seam thickness, 5,000KCal/kg CV

            3.0m seam thickness, 5,000KCal/kg CV

            Khutala

            1.0m seam thickness for OC, 2.5m seam thickness for UG,

            45% ash and 24% dry ash-free volatile matter

            1.0m seam thickness for OC and 3.6m seam thickness for UG

            Wolvekrans

            1.0m seam thickness, 45% ash, 17.9% volatile matter

            1.0m seam thickness, 2,870KCal/kg CV, 45% ash,

            17.9% volatile matter

            Middelburg

            1.0m seam thickness, 45% ash, 17.9% volatile matter

            1.0m seam thickness, 2,870KCal/kg CV, 45% ash,

            17.9% volatile matter

            Klipspruit

            1.0m seam thickness, 45% ash and 24% dry ash-free volatile matter

            1.0m seam thickness, varying 3,580KCal/kg to 4,300KCal/kg, 45% ash

            Leandra North

            1.8m seam thickness

            Naudesbank

            varying 0.5m to 0.8m seam thickness, 45% ash, 22% dry ash-free volatile matter

            Weltevreden

            0.8m seam thickness, 45% ash

            Leandra South

            1.8m seam thickness

            T-Project

            1.8m seam thickness, 18% volatile matter

            Davel

            1.2m seam thickness, 18% volatile matter

            Mt Arthur Coal

            0.3m seam thickness

            0.3m mineable seam thickness, 26.5% ash,

            50% product yield

            Togara South

            1.5m seam thickness

            Cerrejón

            0.65m seam thickness

            0.65m seam thickness

          3. San Juan – The decrease in Coal Resources was mainly due to the exclusion of sterilised areas.

          4. Navajo – Divestment completed in December 2013. BHP Billiton will remain the mine manager and operator until 2016 and therefore production will continue to be reported.

          5. Khutala – Mining method and Coal type previously called OC & UG Met is now reported as OC Th based on potential product specifications.

          6. Klipspruit – The increase in Coal Resources was mainly due to the removal of 4,300KCal/kg CV cut-off, as a result of the ability of the wash plant to beneficiate or blend poorer quality coal for the low quality export market and additional drilling.

          7. Leandra South – Decrease in Coal Resources was due to the exclusion of areas with known dolerite dykes, associated devolatised coal and faulting.

          8. T-Project – Divestment is in progress.

          9. Remainder Block IV – Divestment completed in May 2014.

          10. Togara South – The project remains on care and maintenance with no further exploration/seismic work planned.

          11. Cerrejón – The Coal Resources are restricted to areas which have been identified for inclusion by BHP Billiton based on a risk assessment.


            image

            image

            image

            1

            Strategic Report

            2

            Our assets

            3 Corporate Governance Statement

            4

            Remuneration Report

            5

            Directors’ Report

            As at 30 June 2013



            Inferred Resources

            Total Resources


            BHP Billiton

            Interest

            %

            Total Resources


            Mt


            %Ash


            %VM


            %S

            KCal/kg

            CV


            Mt


            %Ash


            %VM


            %S

            KCal/kg

            CV


            Mt


            %Ash


            %VM


            %S


            KCal/kg CV



            1.0

            18.3

            0.76

            5,740

            134

            19.1

            0.98

            5,670

            100

            164

            17.0

            0.75

            5,600

            890

            21.2

            0.85

            4,900













            165


            18.3


            30.5


            1.70


            6,100

            1,143

            39.5

            22.3

            1.16

            4,790


            986

            33.5

            20.6

            1.11

            4,600

            188

            33.7

            20.5

            0.88

            4,480

            90

            196

            32.6

            20.4

            0.90

            4,500

            118

            30.2

            23.1

            1.06

            5,100

            632

            26.8

            23.2

            1.14

            5,490

            90

            626

            26.4

            23.2

            1.20

            5,500

            7.3

            24.7

            22.1

            0.88

            5,600

            218

            27.9

            21.7

            1.04

            5,420

            90

            213

            27.7

            21.3

            1.00

            5,300

            1.1

            29.8

            21.5

            1.28

            4,950

            139

            27.6

            22.4

            1.23

            5,220

            90

            119

            23.4

            23.3

            1.40

            5,600


            103


            27.0


            23.5


            1.23


            5,060


            507


            27.4


            23.3


            1.26


            5,020


            90


            507


            27.4


            23.3


            1.26


            5,000

            54

            25.3

            25.2

            1.08

            5,580

            289

            25.2

            25.4

            1.08

            5,580

            90

            305

            25.1

            25.4

            1.07

            5,600

            143

            30.6

            21.9

            1.18

            5,050

            547

            30.3

            21.9

            1.21

            5,050

            90

            565

            30.3

            21.9

            1.21

            5,100


            938


            26.0


            22.4


            1.00


            5,030


            1,080


            26.2


            22.3


            1.00


            5,010


            90


            1,144


            26.2


            22.3


            1.00


            5,000

            183

            32.2

            20.3

            0.86

            4,500

            183

            32.2

            20.3

            0.86

            4,500

            90

            183

            32.2

            20.3

            0.86

            4,500

            244

            23.9

            26.4

            1.52

            5,700

            244

            23.9

            26.4

            1.52

            5,700

            90

            244

            23.9

            26.4

            1.52

            5,700

            180

            28.3

            22.6

            0.86

            4,900


            670


            23.4


            28.0


            0.83


            5,950


            3,702


            21.6


            29.1


            0.62


            6,050


            100


            3,726


            21.6


            29.1


            0.62


            6,100


            1,051


            16.8


            28.4


            0.31


            6,210


            1,947


            14.7


            28.9


            0.31


            6,420


            100


            1,947


            14.7


            28.9


            0.31


            6,400


            695


            3.8


            34.4


            0.50


            6,490


            4,568


            3.7


            34.9


            0.50


            6,560


            33.33


            4,608


            3.7


            34.9


            0.50


            6,600

            image


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            Coal Business Coal Reserves As at 30 June 2014


            image

            Proved Coal Reserves


            Probable Coal Reserves


            Total Coal

            Reserves Proved Marketable Coal Reserves Probable Marketable Coal Reserves

            Commodity

            Mining

            Coal

            KCal/kg

            KCal/kg

            Deposit (12)(13)(14)(16)

            Energy Coal New Mexico

            Method

            Type

            Mt

            Mt

            Mt

            Mt

            %Ash

            %VM

            %S

            CV

            Mt

            %Ash

            %VM

            %S

            CV

            San Juan (17)

            UG

            Th

            21

            21

            21

            17.2


            0.99

            5,640

            Navajo

            OC

            Th

            South Africa (18)
















            Khutala (19)

            OC

            Th

            1.4

            1.4

            1.3

            35.7

            21.1

            1.15

            4,640


            UG

            Th

            36

            36

            33

            33.6

            20.3

            0.76

            4,440

            Wolvekrans (20)

            OC

            Th

            389

            17

            406

            273

            21.8

            23.4

            0.47

            6,010

            12

            22.5

            23.7

            0.45

            5,950

            Middelburg (21)

            OC

            Th

            97

            97

            80

            23.2

            23.0

            0.47

            5,890

            Klipspruit (22)

            OC

            Th

            43

            43

            36

            23.0

            23.3

            0.82

            5,800

            Australia
















            Mt Arthur Coal (23)

            OC

            Th

            560

            464

            1,024

            445

            16.6

            30.7

            0.57

            6,420

            372

            16.8

            29.9

            0.50

            6,410

            Colombia
















            Cerrejón (24)

            OC

            Th

            629

            96

            725

            610

            9.4

            33.8

            0.60

            6,180

            94

            9.0

            32.7

            0.60

            6,110

          12. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Coal Reserves

            Probable Coal Reserves

            San Juan

            < 500m (250m radius from drill hole)

            500m to 1,000m (250m to 500m radius from drill hole)

            Khutala

            4 to 8 boreholes per 100ha

            Wolvekrans

            4 to 8 boreholes per 100ha

            Middelburg

            4 to 8 boreholes per 100ha

            Klipspruit

            4 to 8 boreholes per 100ha

            Mt Arthur Coal

            < 500m

            500m to 1,000m

            Cerrejón

            2 to 6 boreholes per 100ha

            • 8 boreholes per 100ha

            • 8 boreholes per 100ha

            • 8 boreholes per 100ha

            • 8 boreholes per 100ha

            • 6 boreholes per 100ha

          13. Product recoveries for the operations were:

            Deposit

            Product Recovery

            San Juan

            100%

            Khutala

            92%

            Wolvekrans

            70%

            Middelburg

            82%

            Klipspruit

            84%

            Mt Arthur Coal

            79%

            Cerrejón

            97%

          14. Total Coal Reserves are at the moisture content when mined (8.5% San Juan; 8.7% Mt Arthur Coal; 12.8% Cerrejón). Total Marketable Coal Reserves are

            the tonnes of coal available, at moisture content (8.5% San Juan; 9.3% Mt Arthur Coal; 14.1% Cerrejón) and air-dried qualities, for sale after the beneficiation of the Total Coal Reserves.

          15. Total moisture is for Total Marketable Coal Reserves product.

          16. Coal delivered to wash plant, except for San Juan and Khutala, where coal is not washed.

          17. San Juan – Coal Reserves were reduced to align with current sales contracts.

          18. Tonnages and qualities for Khutala, Wolvekrans, Middelburg and Klipspruit are reported on an air-dried basis.

          19. Khutala – The decrease in Coal Reserves was due to revised extraction factors for underground pillars in structurally disturbed areas.

          20. Wolvekrans – The decrease in Marketable Coal Reserves was due to a reduced yield impact as a result of increased loss and dilution in pillar mining areas.

          21. Middelburg – The decrease in Coal Reserves was mainly due to the inclusion of a 100m bufferzone around major powerlines and the exclusion of environmentally sensitive areas.

          22. Klipspruit – The decrease in Coal Reserves was due to a lower extraction factor. In addition, the Marketable Coal Reserves decreased due to revised wash plant efficiency factor used to determine the product yield.

          23. Mt Arthur Coal – The decrease in Reserve Life was due to an increased nominated production rate from 26Mtpa in FY2013 to 30.8Mtpa in FY2014.

          24. Cerrejón – The decrease in Reserve Life was due to an increased nominated production rate from 40 Mtpa in FY2013 to 41.5 Mtpa in FY2014.


          image

          image

          image

          1

          Strategic Report

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          As at 30 June 2013




          Total Marketable Coal Reserves


          Reserve BHP Billiton Life Interest

          (years) %


          Total Marketable Coal Reserves


          % Total Moisture (15)


          Reserve

          Life (years)


          Mt


          %Ash


          %VM


          %S


          KCal/kg CV


          Mt


          %Ash


          %VM


          %S


          KCal/kg CV



          21

          17.2

          0.99

          5,640

          3.5

          100

          25

          22.7

          0.85

          5,400

          8.5

          4

          22

          21.8

          0.76

          4,900

          13.0

          3


          1.3


          35.7


          21.1


          1.15


          4,640




          3.0


          34.0


          21.6


          1.25


          4,700


          7.0


          33

          33.6

          20.3

          0.76

          4,440

          5.8

          90

          44

          34.4

          20.1

          0.70

          4,400

          7.0

          7

          285

          21.8

          23.4

          0.46

          6,010

          21

          90

          328

          24.2

          22.6

          0.48

          5,900

          8.0

          22

          80

          23.2

          23.0

          0.47

          5,890

          23

          90

          93

          24.5

          22.5

          0.50

          5,900

          8.0

          24

          36

          23.0

          23.3

          0.82

          5,800

          6.0

          90

          47

          22.9

          23.3

          0.61

          5,800

          8.7

          7


          817


          16.7


          30.3


          0.54


          6,410


          33


          100


          837


          16.7


          30.3


          0.54


          6,400


          8.7


          40


          704


          9.3


          33.7


          0.60


          6,170


          17


          33.33


          730


          9.3


          33.7


          0.60


          6,200


          12.5


          19



          image


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          image

          Aluminium, Manganese and Nickel Business

          image

          Aluminium Mineral Resources

          As at 30 June 2014


          Measured Resources Indicated Resources


          image

          Commodity Deposit (1) Ore Type

          Mt

          %A.Al2O3

          %R.SiO2

          Mt

          %A.Al2O3

          %R.SiO2

          Bauxite Australia

          Worsley (2) Laterite


          366


          31.1


          1.5


          355


          32.0


          2.3

          Brazil

          MRN (3)(4) MRN Crude


          172




          43



          MRN Washed

          128

          50.0

          4.0

          32

          50.5

          4.2

          Guinea

          GAC Project (5) Laterite








          image

          Aluminium Ore Reserves

          As at 30 June 2014


          Proved Ore Reserves Probable Ore Reserves


          image

          Commodity Deposit (1)(6)(7)(8) Ore Type

          Mt

          %A.Al2O3

          %R.SiO2

          Mt

          %A.Al2O3

          %R.SiO2

          Bauxite Australia

          Worsley Laterite


          274


          31.0


          1.6


          22


          30.2


          1.7

          Brazil

          MRN (3)(9) MRN Washed


          79


          49.3


          4.6


          19


          49.8


          4.8

          1. Cut-off grades for Mineral Resources and Ore Reserves – Worsley: variable ranging from 24–29.5%A.Al2O3, 3%R.SiO2 and 1m thickness; MRN Washed 50%TAl2O3, 10%TSiO2, 1m thickness and 30% recovery on a weight per cent basis.

          2. Worsley – The increase in Mineral Resources was mainly due to changes in modelling and estimation method.

          3. MRN – MRN Washed tonnes and grade represent expected product based on forecast beneficiated yield.

          4. MRN – The decrease in Mineral Resources was due to the removal of dilution.

          5. GAC Project – Divestment was completed in July 2013.

          6. Ore delivered to process plant.

          7. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Ore Reserves

            Probable Ore Reserves

            Worsley

            Maximum 80m

            Maximum 160m

            MRN

            A bauxite intersection grid of 200m, plus at least 10 samples reached by search ellipsoid. Mining and metallurgical characterisation (test pit/bulk sample), plus a reliable suite of chemical and size distribution data.

            Those areas with a bauxite intersection grid spacing of less than 400m and/or a 400m spaced grid with a 200m offset fill

            in, plus a minimum of seven samples reached by search ellipsoid, plus a reliable suite of chemical and size distribution data.

          8. Metallurgical recoveries for the operations were:

            Deposit

            Estimated Metallurgical Recovery of A.Al2O3

            Worsley (Worsley Refinery)

            91%

            MRN (Alumar Refinery)

            92%

          9. MRN – The MRN reserves are located on mining leases that provide MRN the right to mine. Current mining areas have environmental approval to operate.

          The increase in Ore Reserves was due to the approval of mining permits for additional plateaus. As further operational licences are obtained, Mineral Resources will be converted to Ore Reserves.


          image

          image

          1

          Strategic Report

          As at 30 June 2013



          Inferred Resources

          Total Resources

          BHP Billiton

          Interest

          %

          Total Resources

          Mt

          %A.Al2O3

          %R.SiO2

          Mt

          %A.Al2O3

          %R.SiO2

          Mt

          %A.Al2O3

          %R.SiO2



          418

          31.2

          2.6

          1,140

          31.4

          2.2

          86

          973

          31.9

          2.3


          525




          740




          14.8


          822



          367

          50.2

          4.2

          527

          50.2

          4.2


          586

          49.0

          5.3








          33.3


          527


          37.7


          1.2


          image

          image

          image

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          As at 30 June 2013



          Total Ore Reserves

          Reserve BHP Billiton

          Life Interest

          (years) %

          Total Ore Reserves

          Mt %A.Al2O3


          %R.SiO2

          Reserve

          Life (years)

          Mt

          %A.Al2O3

          %R.SiO2



          295

          31.0

          1.6

          17

          86

          301

          30.9

          1.8

          17


          98


          49.4


          4.6


          6.1


          14.8


          51


          50.9


          4.1


          3

          image


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          image

          Aluminium, Manganese and Nickel Business

          image

          Manganese Mineral Resources

          As at 30 June 2014


          Measured Resources Indicated Resources


          image

          Commodity Deposit (1)

          Ore Type

          Mt

          %Mn

          %Yield

          Mt

          %Mn

          %Yield

          Manganese Australia








          GEMCO (2)

          Sands

          13

          20.8


          ROM

          95

          46.1

          48

          46

          43.6

          47

          South Africa (3)


          Mt

          %Mn

          %Fe

          Mt

          %Mn

          %Fe

          Wessels

          Lower Body-HG

          5.8

          47.7

          12.0

          13

          48.0

          12.2


          Lower Body-LG

          9.4

          42.1

          13.4

          20

          41.8

          13.3


          Upper Body




          92

          41.4

          18.3

          Mamatwan (4)

          M, C, N Zones

          19

          37.7

          4.4

          45

          37.2

          4.5


          Top Cut (balance I&O)

          9.0

          30.5

          6.6

          20

          29.9

          6.3


          X Zone

          2.4

          38.0

          4.6

          4.6

          37.0

          4.8


          Manganese Ore Reserves








          As at 30 June 2014








          Proved Ore Reserves Probable Ore Reserves


          image

          Commodity Deposit (1)(5)(6)(7)

          Ore Type

          Mt

          %Mn

          %Yield

          Mt

          %Mn

          %Yield

          Manganese Australia








          GEMCO (2)

          ROM

          78

          45.0

          58

          16

          42.6

          57

          South Africa (3)


          Mt

          %Mn

          %Fe

          Mt

          %Mn

          %Fe

          Wessels

          Lower Body-HG

          1.2

          48.0

          12.2

          7.2

          47.6

          12.3


          Lower Body-LG

          2.2

          41.3

          11.9

          13

          41.8

          13.2


          Upper Body




          46

          41.4

          18.2

          Mamatwan

          M, C, N Zones

          19

          37.6

          4.4

          41

          37.1

          4.5


          X Zone

          1.6

          38.2

          4.7

          2.4

          36.7

          4.8

          1. Cut-off grades for Mineral Resources and Ore Reserves – GEMCO: 40%Mn washed product and 1m ore thickness for ROM, > 0%Mn in situ for Sands; Wessels: 45%Mn for Lower Body-HG, 37.5%Mn for Lower Body-LG and Upper Body; Mamatwan: 35%Mn for M, C, N and X Zones, 28%Mn for Top Cut (balance I&O).

          2. GEMCO – Mineral Resource ROM tonnes are stated as in situ, manganese grades are given as per washed ore sample and should be read together with their respective tonnage yields. Mineral Resource Sands tonnes and manganese grades are reported as in situ. Ore Reserve tonnes are stated as ROM, manganese grades are reported as expected product and should be read together with their respective tonnage yields.

          3. Wessels and Mamatwan – Tonnes are stated as wet tonnes.

          4. Mamatwan – The Top Cut (balance I&O) Mineral Resources decreased due to an updated resource model incorporating revised estimation parameters.

          5. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Ore Reserves

            Probable Ore Reserves

            GEMCO

            60m x 120m and 60m x 60m

            120m x 120m

            Wessels

            Defined as rim ±30m wide around mined-out areas, supplemented by some economically viable remnant blocks within mined-out areas

            Defined as all ground beyond 30m

            Mamatwan

            80m x 80m

            160m x 160m

          6. Metallurgical recoveries for the operations were:

            Deposit

            Metallurgical Recovery

            GEMCO

            See yield in Ore Reserves table

            Wessels

            88%

            Mamatwan

            96%

          7. Ore delivered to process plant.


          image

          image

          1

          Strategic Report

          As at 30 June 2013



          Inferred Resources

          Total Resources

          BHP Billiton

          Interest

          %

          Total Resources

          Mt

          %Mn

          %Yield

          Mt

          %Mn

          %Yield

          Mt

          %Mn

          %Yield



          2.3

          20.0

          15

          20.7

          60

          15

          20.7

          34

          42.7

          49

          175

          44.8

          48


          176

          45.2

          48

          Mt

          %Mn

          %Fe

          Mt

          %Mn

          %Fe


          Mt

          %Mn

          %Fe

          19

          47.9

          12.2

          44.4

          21

          47.6

          12.0

          29

          41.9

          13.3


          29

          41.7

          12.9

          92

          41.4

          18.3


          92

          41.4

          18.3

          5.2

          37.4

          4.7

          69

          37.4

          4.5

          44.4

          69

          37.5

          4.4

          5.6

          29.1

          6.2

          34

          29.9

          6.4


          42

          30.6

          6.1

          0.3

          36.2

          5.0

          7.3

          37.3

          4.8


          7.2

          37.3

          4.7


          image

          image

          image

          2

          Our assets

          3 Corporate Governance Statement

          4

          Remuneration Report

          5

          Directors’ Report

          As at 30 June 2013



          Total Ore Reserves

          Reserve BHP Billiton

          Life Interest

          (years) %


          Mt

          Total Ore Reserves

          %Mn


          %Yield

          Reserve

          Life (years)

          Mt

          %Mn

          %Yield



          94

          44.6

          58

          11

          60

          101

          44.7

          59

          12


          Mt

          %Mn

          %Fe



          Mt

          %Mn

          %Fe



          8.4

          47.7

          12.3

          46

          44.4

          11

          47.6

          11.9

          48


          15

          41.7

          13.0



          13

          42.1

          13.2



          46

          41.4

          18.2



          48

          41.5

          17.9



          60

          37.3

          4.5

          18

          44.4

          65

          37.2

          4.5

          20


          4.0

          37.3

          4.8



          4.0

          36.7

          4.8


          image


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          image


          image

          Aluminium, Manganese and Nickel Business

          Nickel Mineral Resources

          image

          As at 30 June 2014 As at 30 June 2013



          Commodity Deposit (1)


          Ore Type

          Measured Resources Indicated Resources Inferred Resources

          Total Resources

          BHP Billiton

          Interest

          %

          Total Resources

          Mt

          %Ni

          Mt

          %Ni

          Mt

          %Ni

          Mt

          %Ni

          Mt

          %Ni

          Matoso (2)

          Laterite

          44

          1.2

          179

          0.9

          66

          0.8

          289

          0.9

          99.94

          325

          0.9


          SP

          51

          1.1

          51

          1.1


          48

          1.2


          MNR Ore

          17

          0.2

          17

          0.2


          18

          0.2

          Australia – Nickel West













          Leinster

          OC

          3.7

          1.4

          1.8

          1.3

          1.4

          1.2

          6.9

          1.3


          7.0

          1.4


          Disseminated Sulphide

          67

          0.5

          105

          0.5

          172

          0.5


          173

          0.5


          UG

          12

          2.1

          3.9

          2.5

          3.7

          1.7

          20

          2.1

          100

          19

          2.4


          SP

          1.4

          1.0

          1.4

          1.0


          1.5

          1.1


          SP Oxidised

          1.9

          1.7

          1.9

          1.7


          1.9

          1.7

          Mt Keith

          Disseminated Sulphide

          176

          0.5

          107

          0.5

          35

          0.5

          318

          0.5

          100

          321

          0.5


          SP

          11

          0.5

          11

          0.5


          20

          0.5

          Cliffs

          Disseminated Sulphide

          2.8

          1.3

          2.8

          1.3

          100

          3.2

          1.2


          Massive Sulphide

          1.4

          4.2

          0.6

          3.6

          0.9

          4.0

          2.9

          4.0


          3.0

          4.0

          Australia – Nickel West













          Yakabindie

          Disseminated Sulphide

          156

          0.6

          113

          0.6

          171

          0.6

          440

          0.6

          100

          439

          0.6

          Jericho

          Disseminated Sulphide

          28

          0.6

          28

          0.6

          50

          28

          0.6

          Venus (3)

          Disseminated Sulphide

          0.5

          2.4

          5.4

          1.7

          5.9

          1.8

          100

          2.5

          1.9


          Massive Sulphide

          1.5

          5.8

          1.5

          5.8


          1.5

          6.0

          Nickel Colombia Cerro


          Operations


          Projects


          Nickel Ore Reserves

          image























          Nickel Colombia














          Cerro Matoso (7)

          Laterite

          16

          1.2

          7.7

          1.0

          24

          1.1

          15

          99.94


          43

          1.2

          28


          SP

          24

          1.3

          24

          1.3




          40

          1.2



          MNR Ore




          18

          0.2


          Australia – Nickel West














          Leinster (8)

          OC

          2.8

          1.3

          0.2

          0.9

          3.0

          1.3

          1.5

          100


          3.1

          1.3

          8


          UG




          9.3

          1.8



          SP




          0.1

          2.3


          Mt Keith

          OC

          88

          0.6

          7.1

          0.5

          95

          0.6

          10

          100


          93

          0.6

          12


          SP

          5.7

          0.5

          5.5

          0.5

          11

          0.5




          20

          0.5


          Cliffs

          UG

          0.7

          2.6

          0.9

          2.5

          1.6

          2.6

          3.2

          100


          1.6

          2.8

          4

          As at 30 June 2014 As at 30 June 2013



          Commodity Deposit (1)(4)(5)(6)


          Ore Type

          Proved Ore Reserves Probable Ore Reserves

          Total Ore Reserves Reserve BHP Billiton

          Total Ore Reserves Reserve

          Life

          Mt %Ni (years)

          Mt

          %Ni

          Mt

          %Ni

          Mt

          %Ni

          Life Interest

          (years) %


          Operations


          image

          1

          Strategic Report

          1. Cut-off grades:

            Deposit

            Ore Type

            Mineral Resources

            Ore Reserves

            Cerro Matoso

            Laterite SP

            MNR Ore

            0.6%Ni

            0.6%Ni

            0.12%Ni

            0.7%Ni

            0.7%Ni

            Leinster

            OC

            Disseminated Sulphide UG

            SP

            0.6%Ni

            0.4%Ni

            1%Ni

            0.7%Ni

            0.6%Ni

            0.9%Ni

            0.9%Ni

            Mt Keith

            Disseminated Sulphide, OC, SP

            Variable between 0.35%Ni and 0.40%Ni

            Variable between 0.35%Ni and 0.40%Ni and

            0.18% recoverable Ni

            Cliffs

            Disseminated Sulphide Massive Sulphide

            UG

            Stratigraphic Stratigraphic

            1.1%Ni

            Yakabindie

            Disseminated Sulphide

            0.4%Ni

            Jericho

            Disseminated Sulphide

            0.4%Ni

            Venus

            Disseminated Sulphide Massive Sulphide

            0.4%Ni

            image

            2

            Our assets

          2. Cerro Matoso – Decrease in Mineral Resources was due to lower nickel price assumptions.

          3. Venus – The increase in Mineral Resources was due to additional drilling, increased geological confidence and revised modelling.

          4. Approximate drill hole spacings used to classify the reserves were:

            Deposit

            Proved Ore Reserves

            Probable Ore Reserves

            Cerro Matoso

            35m or less with three drill holes

            35m to 100m with three drill holes

            Leinster

            25m x 25m

            25m x 50m

            Mt Keith

            60m x 40m

            80m x 80m

            Cliffs

            25m x 25m (and development)

            50m x 50m

            image

            3 Corporate Governance Statement

          5. Metallurgical recoveries for the operations were:

            Deposit

            Metallurgical Recovery

            Cerro Matoso

            82% (reserves to metal)

            Leinster Concentrator (including Cliffs)

            84% at 12% concentrate grade

            Mt Keith

            57% at 16% concentrate grade

          6. Ore delivered to process plant.

          7. Cerro Matoso – The decrease in laterite reserves was due to the exclusion of La Esmerelda (environmental licence approval delay), lower nickel price assumptions, an updated geotechnical model, revised processing plant specifications and changed stockpile assumptions.

            4

            Remuneration Report

            5

            Directors’ Report

          8. Leinster – The decrease in Ore Reserves was due to suspension of mining at the Perseverance underground mine subsequent to a seismic event in October 2013.



          image


          image


          image

          Petroleum and Potash Business

          Mineral Resources

          image

          As at 30 June 2014 As at 30 June 2013

          image

          Total Resources

          %K2O


          %Insol.

          %MgO

          %K2O

          %Insol.

          %MgO

          Measured Resources Indicated Resources Inferred Resources Total Resources


          Commodity Deposit (1)(2)(3)

          Potash


          Ore

          %K2O

          %Insol.

          %MgO

          Type Mt Mt


          Mt Mt


          BHP Billiton

          Mt

          %K2O

          %Insol.

          %MgO

          %K2O

          %Insol.

          %MgO

          Interest

          %

          Jansen LPL 5,350 25.6 7.0 0.29 – – – – 1,270 25.6 7.0 0.29 6,620 25.6 7.0 0.29 100 6,616 25.7 7.1 0.07

          image

          1. The Mineral Resources are stated for the Lower Patience Lake (LPL) potash unit. A stratigraphic cut-off based on the 406 and 402 seams has been applied.

          2. %MgO is used as a measure of carnallite (KCl.MgCl2.6H2O) content where per cent carnallite equivalent = %MgO x 6.8918. The increase in %MgO was due to resource additions around the edges of the deposit, which included a component of massive carnallite.

          3. 25.6% K2O grade is equivalent to 40.5%KCI content using the mineralogical conversion factor of 1.583.

          image

            1. Major projects


              Major projects

              At the end of FY2014, BHP Billiton had seven low-risk, relatively brownfield major projects under development and one major ‘pre-development’ project in evaluation (Jansen Potash) with

              a combined budget of US$14.1 billion. The Group completed the WAIO Jimblebar Mine Expansion and Caval Ridge projects during the year. In addition, a further four projects were successfully completed; namely: Macedon; North West Shelf North Rankin B Gas Compression; Samarco Fourth Pellet Plant; and WAIO Port Blending and Rail Yard Facilities. Another two projects, Newcastle Third Port Stage 3 and Cerrejón P40, delivered first coal during the year.

              The port expansion associated with the Cerrejón P40 project is currently being commissioned, although operational issues are expected to constrain capacity at approximately 35 Mtpa (100 per cent basis) in the medium term.


              A US$212 million increase in the budget of the Escondida Oxide Leach Area Project (OLAP) to US$933 million was approved during the period. The project is now expected to be completed in the second half of CY2014, with no associated impact to production.

              image

              1

              Strategic Report

              In July 2013, BHP Billiton announced an investment of US$3.4 billion to construct a desalination facility which will deliver sustainable water supply to Escondida over the long term. In August 2013,

              BHP Billiton also approved a US$2.6 billion investment to finish the excavation and lining of the Jansen Potash Project production and service shafts, and to continue the installation of essential surface infrastructure and utilities.

              image

              2

              Our assets

              BHP Billiton’s share of capital and exploration expenditure declined by 32 per cent during FY2014, to US$15.2 billion. Capital and exploration expenditure is expected to remain broadly unchanged in the 2015 financial year, with a planned investment rate of US$14.8 billion.


              image

              3 Corporate Governance Statement

              Projects completed or delivered first production during the 2014 financial year

              image



              Capital expenditure

              (US$M) (1)

              Date of initial

              production

              Business

              Project

              Capacity (1)

              Actual (2)

              Budget

              Actual

              Target

              Petroleum

              Macedon (Australia) 71.43% (operator)

              200 million cubic feet of gas per day

              1,200

              1,050

              Q3 CY13

              CY13


              North West Shelf North Rankin B Gas Compression

              (Australia) 16.67% (non-operator)

              2,500 million cubic feet of gas per day

              721

              850

              Q4 CY13

              CY13

              Iron Ore

              Samarco Fourth Pellet Plant (Brazil) 50%

              Increases Samarco iron ore pellet production capacity by

              8.3 million tonnes per annum

              to 30.5 million tonnes per annum

              1,576

              1,750

              Q1 CY14

              H1CY14


              WAIO Jimblebar Mine Expansion (Australia) 85%

              Increases mining and processing capacity to 35 million tonnes per

              annum with incremental debottlenecking opportunities to 55 million tonnes

              per annum

              3,380 3,640 (3) (4) Q3 CY13 Q4 CY13 (4)


              WAIO Port Blending and Rail

              Optimises resource and enhances

              916 1,000 (3) (4) Q4 CY13 H2 CY14


              Yard Facilities (Australia) 85%

              efficiency across the WAIO supply chain





              Coal

              Caval Ridge (Australia) 50%

              Greenfield mine development to produce an initial 5.5 million tonnes per annum of export metallurgical coal

              1,706

              1,870 (3)

              Q2 CY14

              CY14


              Newcastle Third Port Project Stage 3 (Australia) 35.5%

              Increases total coal terminal capacity from 53 million tonnes per annum

              to 66 million tonnes per annum

              367

              367

              Q3 CY13

              CY14


              Cerrejón P40 Project (Colombia) 33.3%

              Increases saleable thermal coal production by 8 million tonnes per annum to approximately 40 million tonnes per annum

              437

              437

              Q4 CY13

              CY13

              image

              4

              Remuneration Report

              10,303 10,964

              image

              1. Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis, and references to capital expenditure from equity accounted investments and other operations are reported at our equity share.

              2. Number subject to finalisation.

              3. Excludes announced pre-commitment funding.

                5

                Directors’ Report

              4. As per revised budget schedule.

              image


              image

              Projects in execution at the end of the 2014 financial year


              image

              Business Project Capacity (1)

              Projects under development


              Capital expenditure (US$M) (1) Date of initial production

              image

              Budget Target


              Petroleum

              North West Shelf Greater Western Flank-A

              To maintain LNG plant throughput from the North West Shelf operations

              400

              CY16


              (Australia) 16.67% (non-operator)





              Bass Strait Longford Gas Conditioning Plant

              Designed to process approximately

              400 million cubic feet of high CO2 gas

              520

              CY16


              (Australia) 50%

              (non-operator)




              Copper

              Escondida Oxide Leach

              New dynamic leaching pad and mineral 933 (4) H2 CY14 (4)

              Area Project (Chile) 57.5%

              handling system. Maintains oxide leaching capacity



              Escondida Organic Growth Project 1

              (Chile) 57.5%

              Replaces the Los Colorados concentrator with a new 152,000 tonnes per day plant

              3,838

              H1CY15

              Escondida Water Supply (Chile) 57.5%

              New desalination facility to ensure continued water supply to Escondida

              3,430

              CY17

              image

              Coal Hay Point Stage Three Expansion (Australia) 50%

              Appin Area 9

              (Australia) 100%

              Increases port capacity from 44 million tonnes per annum to 55 million tonnes per annum and reduces storm vulnerability

              Maintains Illawarra Coal’s production capacity with a replacement mining domain and capacity to produce 3.5 million tonnes per annum of metallurgical coal

              1,505 (3) (4) CY15 (4)


              845 CY16


              image

              11,471


              image


              image

              Other projects in progress at the end of the 2014 financial year


              image

              Business Project Capacity (1)

              image

              Projects under development

              Potash Jansen Potash (Canada) 100% Investment to finish the excavation and lining of the production and service shafts,

              and to continue the installation of essential surface infrastructure and utilities


              Capital expenditure (US$M) (1)

              image

              Budget


              2,600


              image

              14,071


              image

              1. Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis, and references to capital expenditure from equity accounted investments and other operations are reported at our equity share.

              2. Number subject to finalisation.

              3. Excludes announced pre-commitment funding.

              4. As per revised budget schedule.

              image

              image

              1

              Strategic Report

            2. Business performance

              The discussion of results for our Businesses is set out in Section 1.12 of this Annual Report with further information below.

                  1. Group Revenue and Underlying EBIT

                    The following table reconciles our statutory income statement to the principal factors that affected Underlying EBIT for FY2014.


                    image

                    Total expenses, other income and share of equity

                    accounted Profit from Exceptional Underlying Revenue investments operations items EBIT US$M US$M US$M US$M US$M

                    image

                    For the year ended 30 June 2013

                    image

                    2

                    Our assets

                    Revenue 65,953

                    Other income 3,947

                    Expenses excluding net finance costs (50,040)

                    Share of operating profit of equity accounted investments 1,142

                    image

                    3 Corporate Governance Statement

                    4

                    Remuneration Report

                    5

                    Directors’ Report

                    accounted investments


                    (44,951)



                    Profit from operations



                    21,002

                    Exceptional items




                    1,928


                    Underlying EBIT





                    22,930

                    Changes in volumes:






                    Productivity

                    2,260

                    (1,298)

                    962

                    962

                    Growth

                    3,221

                    (1,292)

                    1,929

                    1,929


                    5,481

                    (2,590)

                    2,891

                    2,891

                    Net price impact:






                    Change in sales prices

                    (3,301)

                    (95)

                    (3,396)

                    (3,396)

                    Price-linked costs

                    (80)

                    (80)

                    (80)


                    (3,301)

                    (175)

                    (3,476)

                    (3,476)

                    Change in controllable cash costs:






                    Operating cash costs

                    1,524

                    1,524

                    1,524

                    Exploration and business development

                    398

                    398

                    398


                    1,922

                    1,922

                    1,922

                    Change in other costs:






                    Exchange rates (202)

                    1,962

                    1,760

                    1,760

                    Inflation on costs –

                    (805)

                    (805)

                    (805)

                    Fuel and energy –

                    (46)

                    (46)

                    (46)

                    Non-cash –

                    (2,091)

                    (2,091)

                    (2,091)


                    (202)

                    (980)

                    (1,182)

                    (1,182)

                    Asset sales

                    53

                    53

                    53

                    Ceased and sold operations

                    (494)

                    2

                    (492)

                    (492)

                    Exceptional items

                    2,479

                    2,479

                    (2,479)

                    Other

                    (231)

                    446

                    215

                    215


                    For the year ended 30 June 2014






                    Revenue

                    67,206





                    Other income


                    1,524




                    Expenses excluding net finance costs


                    (46,513)




                    Share of operating profit of equity accounted investments


                    1,195




                    Total expenses, other income and share of equity






                    accounted investments

                    (43,794)



                    Profit from operations


                    23,412


                    Exceptional items



                    (551)

                    Underlying EBIT



                    22,861

                    Total expenses, other income and share of equity


                    image


                    image


                    image



                  2. Petroleum and Potash Business

              An analysis of the financial performance of our Petroleum and Potash Business for FY2014 compared to FY2013 is included in section 1.12.2. Financial information for the Petroleum and Potash Business for the 2014 and 2013 financial years is presented below.

              image

              Year ended Net

              30 June 2014 Underlying Underlying operating Capital Exploration Exploration

              US$ million Revenue (i) (ii) EBITDA D&A EBIT assets expenditure (iii) gross (iv) to profit (v)

              Bass Strait

              1,885

              1,555

              132

              1,423

              2,864

              259

              North West Shelf (vi)

              2,432

              1,599

              175

              1,424

              1,691

              193

              Atlantis

              1,535

              1,407

              335

              1,072

              2,272

              409

              Shenzi

              1,430

              1,281

              243

              1,038

              1,598

              306

              Mad Dog

              217

              171

              16

              155

              461

              83

              Onshore US

              4,264

              2,270

              2,426

              (156)

              26,945

              4,226

              Algeria

              465

              396

              30

              366

              104

              19

              UK (vii)

              Exploration

              155

              70

              (369)

              52

              113

              18

              (482)

              (38)

              464

              15

              Other (viii) (ix) 2,027 1,744

              735

              1,009

              1,907 369

              Total Petroleum

              14,410

              10,124

              4,257

              5,867

              38,268

              5,879

              600

              497

              Potash

              (211)

              74

              (285)

              2,255

              544

              47

              47

              Other (x)

              (298)

              (298)

              (1,009)

              Total Petroleum and Potash









              from Group production

              14,410

              9,615

              4,331

              5,284

              39,514

              6,423

              647

              544

              Third party products

              437

              3

              3



              Total Petroleum and Potash

              14,847

              9,618

              4,331

              5,287

              39,514

              6,423

              647

              544

              Statutory adjustments (xi)

              (14)

              (3)

              (3)

              Total Petroleum and Potash









              statutory result

              14,833

              9,615

              4,328

              5,287

              39,514

              6,423

              647

              544

              image

              1

              Strategic Report

                  1. Petroleum and Potash Business continued

                    image

                    Year ended

                    30 June 2013 Net

                    (Republished) Underlying Underlying operating Capital Exploration Exploration

                    image

                    2

                    Our assets

                    US$ million Revenue (i) (ii) EBITDA D&A EBIT assets expenditure (iii) gross (iv) to profit (v)

                    Bass Strait

                    1,921

                    1,564

                    119

                    1,445

                    2,834

                    526

                    North West Shelf

                    2,578

                    1,913

                    234

                    1,679

                    1,880

                    221

                    Atlantis

                    853

                    710

                    147

                    563

                    2,166

                    419

                    Shenzi

                    1,614

                    1,519

                    283

                    1,236

                    1,524

                    289

                    Mad Dog

                    276

                    233

                    98

                    135

                    420

                    89

                    Onshore US

                    2,987

                    1,508

                    1,795

                    (287)

                    25,019

                    4,699

                    Algeria

                    533

                    460

                    18

                    442

                    90

                    22

                    UK

                    244

                    95

                    46

                    49

                    45

                    8

                    Exploration

                    (522)

                    230

                    (752)

                    529

                    Other (viii) (ix) 2,032 1,746

                    282

                    1,464

                    1,973 794

                    Total Petroleum

                    13,038

                    9,226

                    3,252

                    5,974

                    36,480

                    7,067

                    675

                    620

                    Potash

                    (309)

                    25

                    (334)

                    1,758

                    608

                    89

                    89

                    Other (x)

                    18

                    (15)

                    (15)

                    (713)

                    Total Petroleum and Potash from Group production


                    13,056


                    8,902


                    3,277


                    5,625


                    37,525


                    7,675


                    764


                    709

                    Third party products

                    175

                    11

                    11



                    Total Petroleum and Potash

                    13,231

                    8,913

                    3,277

                    5,636

                    37,525

                    7,675

                    764

                    709

                    Statutory adjustments (xi)

                    (7)

                    (3)

                    (3)

                    Total Petroleum and Potash statutory result


                    13,224


                    8,910


                    3,274


                    5,636


                    37,525


                    7,675


                    764


                    709

                    image

                    3 Corporate Governance Statement

                    1. Petroleum revenue from Group production includes: crude oil US$8,645 million (2013: US$7,604 million), natural gas US$3,119 million (2013: US$2,842 million), LNG US$1,614 million (2013: US$1,686 million), NGL US$916 million (2013: US$823 million) and other US$102 million (2013: US$76 million).

                    2. Includes inter-segment revenue of US$262 million (2013: US$ nil).

                    3. Capital expenditure in aggregate comprises Petroleum US$5,600 million growth and US$279 million other (2013: US$6,883 million growth and US$184 million other) and Potash US$533 million growth and US$11 million other (2013: US$597 million growth and US$11 million other).

                    4. Includes US$231 million of Petroleum capitalised exploration (2013: US$153 million).

                    5. Includes US$128 million of Petroleum exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2013: US$98 million).

                    6. Includes an expense of US$143 million incurred in May 2014 related to the purchase price adjustment for the Browse asset sale completed in the 2013 financial year.

                    7. Includes an expense of US$112 million incurred in November 2013 related to the closure of the UK pension plan. Also includes a gain of US$120 million related to the sale of the Liverpool Bay asset in March 2014.

                    8. Includes Macedon, Pyrenees, Stybarrow, Neptune, Minerva, Angostura, Genesis, Pakistan, divisional activities, business development and ceased and sold operations. Also includes the Caesar oil pipeline and the Cleopatra gas pipeline which are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

                    9. Includes an unrealised gain of US$74 million related to Angostura embedded derivative (2013: US$84 million unrealised loss).

                    10. Includes closed mining and smelting operations in Canada and the United States.

                      image

                      4

                      Remuneration Report

                    11. Includes statutory adjustments for the Caesar oil pipeline and the Cleopatra gas pipeline to reconcile the proportionately consolidated business total to the statutory result.


                  2. Copper Business

                    5

                    Directors’ Report

                    An analysis of the financial performance of our Copper Business for FY2014 compared to FY2013 is included in section 1.12.3. Financial information for the Copper Business for the 2014 and 2013 financial years is presented below.

                    Year ended 30 June 2014 US$ million


                    Revenue


                    Underlying

                    EBITDA


                    D&A


                    Underlying

                    EBIT

                    Net operating

                    assets


                    Capital Exploration expenditure (i) gross


                    Exploration to profit

                    Escondida (ii)

                    8,085

                    4,754

                    760

                    3,994

                    11,779

                    3,186


                    Pampa Norte (iii)

                    1,796

                    785

                    429

                    356

                    2,575

                    336


                    Antamina (iv)

                    1,261

                    818

                    84

                    734

                    1,341

                    262


                    Cannington

                    1,079

                    459

                    47

                    412

                    234

                    60


                    Olympic Dam

                    1,777

                    299

                    265

                    34

                    6,320

                    167


                    Other (iv) (v)

                    101

                    (193)

                    7

                    (200)

                    (18)

                    13


                    Total Copper from Group production

                    14,099

                    6,922

                    1,592

                    5,330

                    22,231

                    4,024



                    Third party products

                    1,030

                    8

                    8



                    Total Copper

                    15,129

                    6,930

                    1,592

                    5,338

                    22,231

                    4,024

                    118

                    118

                    Statutory adjustments (vi)

                    (1,261)

                    (344)

                    (86)

                    (258)

                    (267)

                    (2)

                    (2)

                    Total Copper statutory result

                    13,868

                    6,586

                    1,506

                    5,080

                    22,231

                    3,757

                    116

                    116

                    image


                    2.5.3 Copper Business continued









                    Year ended 30 June 2013






                    Net




                    (Republished)


                    Underlying


                    Underlying

                    operating

                    Capital

                    Exploration

                    Exploration

                    US$ million

                    Revenue

                    EBITDA

                    D&A

                    EBIT

                    assets

                    expenditure (i)

                    gross

                    to profit

                    Escondida (ii)

                    8,596

                    5,175

                    649

                    4,526

                    9,450

                    2,859



                    Pampa Norte (iii)

                    1,913

                    841

                    291

                    550

                    2,643

                    348



                    Antamina (iv)

                    1,295

                    901

                    80

                    821

                    1,311

                    326



                    Cannington

                    1,365

                    646

                    40

                    606

                    206

                    39



                    Olympic Dam

                    1,873

                    245

                    249

                    (4)

                    6,418

                    399



                    Other (iv) (v)

                    90

                    (554)

                    19

                    (573)

                    46

                    289



                    Total Copper from Group production

                    15,132

                    7,254

                    1,328

                    5,926

                    20,074

                    4,260



                    Third party products

                    700

                    3

                    3



                    Total Copper

                    15,832

                    7,257

                    1,328

                    5,929

                    20,074

                    4,260

                    277

                    277

                    Statutory adjustments (vi)

                    (1,295)

                    (372)

                    (82)

                    (290)

                    (330)

                    (3)

                    (3)

                    Total Copper statutory result

                    14,537

                    6,885

                    1,246

                    5,639

                    20,074

                    3,930

                    274

                    274

                    1. Capital expenditure in aggregate comprises US$2,629 million growth and US$1,128 million other (2013: US$2,167 million growth and US$1,763 million other).

                    2. Escondida is consolidated under IFRS 10 and reported on a 100 per cent basis.

                    3. Includes Spence and Cerro Colorado.

                    4. Antamina and Resolution are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

                    5. Predominantly comprises divisional activities, greenfield exploration, business development and ceased and sold operations. Includes Pinto Valley and Resolution. Pinto Valley was sold effective 11 October 2013.

                    6. Includes statutory adjustments for Antamina and Resolution to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs of US$4 million and taxation of US$254 million (2013: net finance costs of US$ nil and taxation of US$290 million).


                  3. Iron Ore Business

                    An analysis of the financial performance of our Iron Ore Business for FY2014 compared to FY2013 is included in section 1.12.4. Financial information for the Iron Ore Business for the 2014 and 2013 financial years is presented below.

                    Year ended 30 June 2014 US$ million


                    Underlying

                    Revenue (i) EBITDA


                    Underlying

                    D&A EBIT

                    Net

                    operating Capital Exploration Exploration assets expenditure (ii) gross (iii) to profit (iv)

                    Western Australia Iron Ore

                    21,013

                    12,988

                    1,429

                    11,559

                    22,278

                    2,947



                    Samarco (v)

                    1,634

                    846

                    56

                    790

                    1,072

                    424



                    Other (vi)

                    (54)

                    (54)

                    40



                    Total Iron Ore from Group production

                    22,647

                    13,780

                    1,485

                    12,295

                    23,390

                    3,371



                    Third party products (vii)

                    343

                    (3)

                    (3)



                    Total Iron Ore

                    22,990

                    13,777

                    1,485

                    12,292

                    23,390

                    3,371

                    169

                    56

                    Statutory adjustments (viii)

                    (1,634)

                    (246)

                    (56)

                    (190)

                    (422)

                    Total Iron Ore statutory result

                    21,356

                    13,531

                    1,429

                    12,102

                    23,390

                    2,949

                    169

                    56










                    Year ended









                    30 June 2013





                    Net




                    (Republished) Underlying Underlying operating Capital Exploration Exploration

                    US$ million Revenue (i) EBITDA D&A EBIT assets expenditure (ii) gross (iii) to profit (iv)

                    Western Australia Iron Ore

                    18,452

                    11,668

                    1,004

                    10,664

                    21,074

                    5,979



                    Samarco (v)

                    1,622

                    811

                    61

                    750

                    1,037

                    772



                    Other (vi)

                    (84)

                    (84)

                    15



                    Total Iron Ore from Group production

                    20,074

                    12,395

                    1,065

                    11,330

                    22,126

                    6,751



                    Third party products (vii)

                    141

                    31

                    31



                    Total Iron Ore

                    20,215

                    12,426

                    1,065

                    11,361

                    22,126

                    6,751

                    217

                    74

                    Statutory adjustments (viii)

                    (1,622)

                    (313)

                    (61)

                    (252)

                    (772)

                    Total Iron Ore statutory result

                    18,593

                    12,113

                    1,004

                    11,109

                    22,126

                    5,979

                    217

                    74

                    1. Includes inter-segment revenue of US$213 million (2013: US$55 million).

                    2. Capital expenditure in aggregate comprises US$2,762 million growth and US$187 million other (2013: US$5,848 million growth and US$131 million other).

                    3. Includes US$57 million capitalised exploration (2013: US$143 million).

                    4. Includes a reversal of US$56 million of exploration expenditure previously written off as impaired (included in depreciation and amortisation) (2013: US$ nil).

                    5. Samarco is an equity accounted investment and is reported on a proportionate consolidation basis (with the exception of net operating assets).

                    6. Predominantly comprises divisional activities, business development and ceased operations.

                    7. Includes inter-segment and external sales of contracted gas purchases.

                    8. Includes statutory adjustments for Samarco to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs of US$87 million and taxation of US$103 million (2013: net finance costs of US$25 million and taxation of US$227 million).

                    image

                    1

                    Strategic Report

                  4. Coal Business

                    image

                    2

                    Our assets

                    An analysis of the financial performance of our Coal Business for FY2014 compared to FY2013 is included in section 1.12.5. Financial information for the Coal Business for the 2014 and 2013 financial years is presented below.

                    Year ended 30 June 2014 US$ million


                    Revenue


                    Underlying

                    EBITDA


                    D&A


                    Underlying

                    EBIT

                    Net operating

                    assets


                    Capital Exploration expenditure (i) gross


                    Exploration to profit

                    Queensland Coal

                    4,666

                    949

                    514

                    435

                    9,115

                    1,790


                    Illawarra (ii)

                    886

                    131

                    170

                    (39)

                    1,384

                    309


                    Energy Coal South Africa (ii)

                    1,279

                    315

                    485

                    (170)

                    989

                    65


                    New Mexico

                    520

                    105

                    46

                    59

                    202

                    26


                    New South Wales Energy Coal (ii)

                    1,350

                    324

                    150

                    174

                    1,392

                    170


                    Colombia (ii)

                    814

                    305

                    85

                    220

                    1,037

                    133


                    Other (iii)

                    (166)

                    2

                    (168)

                    162

                    34


                    Total Coal from Group production

                    9,515

                    1,963

                    1,452

                    511

                    14,281

                    2,527



                    Third party products

                    456

                    18

                    18

                    19



                    Total Coal

                    9,971

                    1,981

                    1,452

                    529

                    14,300

                    2,527

                    34

                    34

                    Statutory adjustments (iv)

                    (856)

                    (264)

                    (121)

                    (143)

                    (182)

                    Total Coal statutory result

                    9,115

                    1,717

                    1,331

                    386

                    14,300

                    2,345

                    34

                    34










                    Year ended 30 June 2013






                    Net




                    (Republished)


                    Underlying


                    Underlying

                    operating

                    Capital

                    Exploration

                    Exploration

                    US$ million

                    Revenue

                    EBITDA

                    D&A

                    EBIT

                    assets

                    expenditure (i)

                    gross

                    to profit

                    Queensland Coal

                    4,452

                    627

                    376

                    251

                    7,988

                    2,771



                    Illawarra (ii)

                    1,287

                    311

                    148

                    163

                    1,238

                    357



                    Energy Coal South Africa (ii)

                    1,457

                    177

                    211

                    (34)

                    1,334

                    133



                    New Mexico

                    588

                    95

                    49

                    46

                    164

                    28



                    New South Wales Energy Coal (ii)

                    1,526

                    314

                    120

                    194

                    1,372

                    366



                    Colombia (ii)

                    828

                    307

                    65

                    242

                    997

                    265



                    Other (iii)

                    (158)

                    2

                    (160)

                    111

                    85



                    Total Coal from Group production

                    10,138

                    1,673

                    971

                    702

                    13,204

                    4,005



                    Third party products

                    585

                    44

                    44

                    21



                    Total Coal

                    10,723

                    1,717

                    971

                    746

                    13,225

                    4,005

                    42

                    42

                    Statutory adjustments (iv)

                    (828)

                    (237)

                    (86)

                    (151)

                    (379)

                    (3)

                    (3)

                    Total Coal statutory result

                    9,895

                    1,480

                    885

                    595

                    13,225

                    3,626

                    39

                    39

                    image

                    image

                    3 Corporate Governance Statement

                    4

                    Remuneration Report

                    1. Capital expenditure in aggregate comprises US$1,563 million growth and US$782 million other (2013: US$2,898 million growth and US$728 million other).

                    2. Cerrejón, Newcastle Coal Infrastructure Group, Port Kembla Coal Terminal and Richards Bay Coal Terminal are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

                    3. Predominantly comprises divisional activities and greenfield projects.

                      5

                      Directors’ Report

                    4. Includes statutory adjustments for Cerrejón, Newcastle Coal Infrastructure Group, Port Kembla Coal Terminal and Richards Bay Coal Terminal to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance income of US$1 million and taxation of US$81 million (2013: net finance income of US$1 million and taxation of US$99 million).


                    image



                  5. Aluminium, Manganese and Nickel Business

              An analysis of the financial performance of our Aluminium, Manganese and Nickel Business for FY2014 compared to FY2013 is included in section 1.12.6.

              Financial information for the Aluminium, Manganese and Nickel Business for the 2014 and 2013 financial years is presented below.


              Year ended 30 June 2014


              Underlying


              Underlying

              Net operating


              Capital Exploration Exploration

              US$ million

              Revenue (i)

              EBITDA

              D&A

              EBIT

              assets

              expenditure (ii)

              gross (iii) to profit(iv)

              Alumina

              1,548

              217

              202

              15

              4,454

              60


              Aluminium

              2,398

              178

              145

              33

              1,790

              41


              Intra-divisional adjustment

              (659)



              3,287

              395

              347

              48

              6,244

              101


              Manganese

              2,096

              639

              163

              476

              1,613

              178


              Nickel West

              1,605

              (91)

              117

              (208)

              534

              163


              Cerro Matoso

              595

              104

              94

              10

              860

              56


              Other (v)

              (36)

              1

              (37)

              71


              Total Aluminium, Manganese and Nickel

              from Group production

              7,583

              1,011

              722

              289

              9,322

              498



              Third party products

              828

              18

              18



              Total Aluminium, Manganese and Nickel

              8,411

              1,029

              722

              307

              9,322

              498

              44

              38

              Statutory adjustments

              Total Aluminium, Manganese and Nickel

              statutory result 8,411 1,029 722 307 9,322 498 44 38

              image


              image

              Year ended

              30 June 2013 Net

              (Republished) Underlying Underlying operating Capital Exploration Exploration

              US$ million Revenue (i) EBITDA D&A EBIT assets expenditure (ii) gross (iii) to profit(iv)

              Alumina

              1,422

              114

              239

              (125)

              3,844

              157


              Aluminium

              2,620

              88

              127

              (39)

              2,154

              27

              Intra-divisional adjustment

              (638)


              3,404

              202

              366

              (164)

              5,998

              184

              Manganese

              2,113

              623

              116

              507

              1,658

              375

              Nickel West

              1,773

              (104)

              210

              (314)

              123

              280

              Cerro Matoso

              803

              235

              79

              156

              955

              50

              Other (v)

              (79)

              (14)

              (65)

              75

              4

              Total Aluminium, Manganese and Nickel from Group production


              8,093


              877


              757


              120


              8,809


              893

              Third party products

              1,185

              38

              38

              Total Aluminium, Manganese and Nickel

              9,278

              915

              757

              158

              8,809

              893

              57

              53

              Statutory adjustments

              Total Aluminium, Manganese and Nickel statutory result


              9,278


              915


              757


              158


              8,809


              893


              57


              53

              1. Includes inter-segment revenue of US$5 million (2013: US$20 million).

              2. Capital expenditure in aggregate comprises US$43 million growth and US$455 million other (2013: US$285 million growth and US$608 million other).

              3. Includes US$6 million capitalised exploration (2013: US$8 million).

              4. Includes US$ nil exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2013: US$4 million).

              5. Predominantly comprises divisional activities and business development.

              image

              image

              1

              Strategic Report

          1. Corporate Governance Statement

          This section of our Annual Report outlines the Corporate Governance processes of BHP Billiton.


          image

          image

          2

          Our assets

          Contents of the Corporate Governance Statement

          image

            1. Governance at BHP Billiton

              image

            2. Board of Directors and Group Management Committee

              image

            3. Shareholder engagement

              image

            4. Role and responsibilities of the Board

              image

            5. Board membership

              image

            6. Chairman

              image

              image

            7. Senior Independent Director

              image

              3 Corporate Governance Statement

            8. Director skills, experience and attributes

              image

            9. Director induction, training and development

              image

            10. Independence

              image

            11. Board evaluation

              image

            12. Board meetings and attendance

              image

            13. Director re-election

              image

            14. Board committees

              image

            15. Risk management governance structure

              image

            16. Management

              image

              image

              4

              Remuneration Report

            17. Business conduct

              image

            18. Diversity and inclusion at BHP Billiton

              image

            19. Market disclosure

              image

            20. Remuneration

              image

            21. Directors’ share ownership

              image

            22. Company secretaries

              image

            23. Conformance with corporate governance standards

              image

              5

              Directors’ Report

            24. Additional UK disclosure

          image


          image


          image

            1. Governance at BHP Billiton



              image


              image


              ‘At BHP Billiton, we have a governance framework that goes beyond an interest in governance for its own sake or the need to comply with regulatory requirements.’

              Dear Shareholder

              Welcome to BHP Billiton’s Corporate Governance Statement.

              At BHP Billiton, we have a governance framework that goes beyond an interest in governance for its own sake or the need to comply with regulatory requirements. Instead, we believe

              that high-quality governance supports long-term value creation. Simply put, we think good governance is good business, and our approach is to adopt what we consider to be the better of the prevailing governance standards in Australia, the United Kingdom and the United States.

              In the same spirit, we do not see governance as just a matter for the Board. Good governance is also the responsibility of executive management and is embedded throughout the organisation.

              the diagram on the following page describes the governance framework at BHP Billiton. It shows the interaction between the shareholders and the Board, demonstrates how the Board Committee structure facilitates the interaction between the Board and the

              Chief executive Officer (CeO) and illustrates the flow of delegation

              from shareholders. We have robust processes in place to ensure

              Jac Nasser AO

              Chairman

              11 September 2014

              that the delegation flows through the Board and its committees to the CeO and Group Management Committee (GMC) and into the organisation. At the same time, accountability flows back upwards from the Company to shareholders. this process helps to ensure alignment with shareholders.

              As part of our corporate planning cycle, we have embedded a range of scenarios that are reviewed annually and updated by the Group with the GMC’s involvement. the scenarios, and

              the governance process supporting them, also form part of the Board agenda.

              these scenarios provide a lens to assess the performance of our business portfolio. they include assumptions around carbon and commodity prices, currencies, costs and tax rates and ranges for a number of risks that face the Group, including climate change,

              global growth, levels of trade, geopolitical situation and technology focus. All of the scenarios are used to inform BHP Billiton’s strategy and the resilience of our diversified asset portfolio over the short and long term.

              Regardless of which direction the world may take, we will always

              be guided by Our Charter values, including our value of Sustainability, in how we operate our business, interact with our stakeholders and plan for the future.

              As we set out later in this report, while the five committees have accountability for making recommendations to the Board on certain matters such as remuneration and sustainability, we ensure that

              all the Board members have oversight and the opportunity for full discussion of those issues through the committee report-out process to the full Board.

              Our BHP Billiton Charter is core to the governance framework of BHP Billiton. It embodies our corporate purpose, strategy and values, and defines when we are successful. We foster

              a culture that values and rewards high ethical standards, personal and corporate integrity and respect for others.

              We live the values of Our Charter and adhere to the standards of conduct required by our BHP Billiton Code of Business Conduct.



              image

              image

              1

              Strategic Report

              BHP Billiton governance structure

              image


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              image


              Appointment of Mr Brinded

              We are focused on enhancing the diversity of perspective on the Board. We do this in a structured manner, looking out over

              a five-year period at the skills, backgrounds, knowledge, experience and diversity on the Board. The right blend of skills, experience and perspective is critical to ensuring the Board oversees BHP Billiton effectively for shareholders. As a result of this process, and as described in last year’s Annual Report, we have been seeking additional upstream oil, gas and shale experience.

              We are therefore pleased that Malcolm Brinded joined the Board as a Non-executive Director and member of the Sustainability Committee in April 2014. Mr Brinded served on the Board of Royal Dutch Shell plc between 2002 and 2012. During his 37-year career with Shell, he held leadership roles, including Executive Director of Exploration and Production, Executive Director of Upstream International and UK Country Chair and Managing Director. His appointment reflects the structured and rigorous approach to the Board’s succession and planning.

              Ongoing renewal

              As part of our ongoing renewal of the Board, we announced in August that David Crawford will be retiring from the Board after the forthcoming Annual General Meetings. Mr Crawford has been appointed Chairman-designate of the new company that BHP Billiton plans to form in a demerger. On behalf of all shareholders, I would like to thank him for his exceptional service to the Board and the Group over many years and wish him all the best for the future.

              It is also intended that Keith Rumble will become a Non-executive Director of the demerged company, and that he will retire from the BHP Billiton Board at or around the time the demerger is completed (currently scheduled for mid-2015).

              In relation to gender diversity, the Board has set a goal of increasing the number of women on the Board to at least three. This remains our target, which we aim to achieve by the end of 2015. More details about the Board’s diversity of skills and experience are set out

              image

              3 Corporate Governance Statement

              in section 3.8 of this Annual Report.

              Continuous improvement

              The Board has a commitment to ongoing improvement. This year, we conducted an externally facilitated review of the Board, and a range of improvements to the Board’s work and effectiveness has been agreed, which are set out in section 3.11. In particular, the formalising of a focused strategy day built around scenarios and sign posts for future developments provides an opportunity for the Board to undertake a deeper dive into a range of strategic and long-term plans.

              image

              image

              4

              Remuneration Report

              I hope you find this description of our corporate governance useful and look forward to receiving any feedback that fellow shareholders may have.


              Jac Nasser AO

              5

              Directors’ Report

              Chairman



              image


              BHP BIllITON ANNUAl REPORT 2014 — 143


              image

            2. Board of Directors and Group Management Committee


          3.2.1 Board of Directors



          image image


          image

          image

          image

          Top left to right: Jac Nasser,

          Andrew Mackenzie, Malcolm Brinded, Malcolm Broomhead.

          image


          Jac Nasser AO, BBus, Hon DT, 66

          Chairman and Independent Non-executive Director

          Director of BHP Billiton limited and BHP Billiton Plc since June 2006.

          Appointed Chairman of BHP Billiton limited and BHP Billiton Plc on 31 March 2010.

          Skills and experience: Following a 33-year career with Ford Motor Company in leadership positions in europe, Australia, Asia, South America and the United States, Mr nasser served as a member of the Board of Directors and as President and Chief executive Officer of Ford Motor Company

          from 1998 to 2001. He has more than three decades of experience in large-scale global businesses and a decade of private equity investment and operating expertise.

          Other directorships and offices (current and recent):

          • Director of 21st Century Fox (since June 2013).

          • Consultant to One equity Partners (since March 2013) (Partner from november 2002 until March 2010, non-executive Advisory Partner from March 2010 to March 2013).

          • Member of Australian Prime Minister’s Business Advisory Council (since December 2013).

          • Member of the International Advisory Council of Allianz Aktiengesellschaft (since February 2001).

          • Former Director of British Sky Broadcasting Group plc (from november 2002 to november 2012).

            Board Committee membership:

          • Chairman of the nomination and Governance Committee.

            Andrew Mackenzie BSc (Geology), PhD (Chemistry), 57

            Non-independent

            Director of BHP Billiton limited and BHP Billiton Plc since May 2013. Mr Mackenzie was appointed Chief executive Officer on 10 May 2013.

            Skills and experience: Mr Mackenzie has over 30 years’ experience in oil and gas, petrochemicals and minerals. He joined BHP Billiton in november 2008 as Chief executive non-Ferrous. Prior to BHP Billiton,

            Mr Mackenzie worked at Rio tinto, where he was Chief executive

            of Diamonds and Minerals, and BP, where he held a number of senior roles, including Group Vice President for technology and engineering, and Group Vice President for Chemicals.

            Other directorships and offices (current and recent):

          • Director of the Grattan Institute (since May 2013).

          • Director of the International Council on Mining and Metals (since May 2013).

          • Former non-executive Director of Centrica plc (from September 2005 to May 2013).

            Board Committee membership:

          • none.

Malcolm Brinded CBE, MA, 61

Independent Non-executive Director

Director of BHP Billiton limited and BHP Billiton Plc since April 2014.

Skills and experience: Malcolm has extensive experience in energy, governance and sustainability. He served as a member of the Board of Directors of Royal Dutch Shell plc from 2002 to 2012. During his 37-year career with Shell, he held various leadership positions in the United Kingdom, europe, the Middle east and Asia, including executive Director of exploration and Production, executive Director of Upstream International and Chairman and Upstream Managing Director of Shell UK.

Other directorships and offices (current and recent):

these malus and clawback provisions apply whether or not awards are made in the form of cash or equity, and whether or not the equity has vested.

Legacy incentive plans under which awards may vest

image

the remuneration policy approved by shareholders is required to cover awards which were granted under legacy plans and which may vest in the future on their existing terms. Key terms are shown in the table below.


Remuneration component

image

and link to strategy Operation and performance framework


Maximum value on vesting

STI under the GIS

image

the former GiS was replaced by the StiP (described in the previous table) from FY2014. Awards were provided for the same purpose as the StiP.

LTI under the former LTIP

the former ltiP was replaced by the new ltiP (described in the previous table) from FY2014. Awards were provided for the same purpose as the new ltiP.


image

Remuneration mix for the CEO (US$’000)

Sti and lti are the two components of remuneration that are measured on business performance, with the outcome assessed against pre-determined performance conditions.

image

1

Strategic Report

the minimum amount the Ceo could earn in respect of FY2015 is uS$2.217 million, which is fixed remuneration, and made

up of his base salary of uS$1.700 million, pension contributions of uS$0.425 million and benefits of uS$0.092 million.

the maximum is uS$13.097 million. this assumes he earns

image

the maximum under the Sti of uS$4.080 million and the normal maximum under the lti of uS$6.800 million. All of these components are shown in the table below at the minimum, target and maximum levels. the normal maximum amount of the lti has been calculated on the basis of full vesting at the share price on the date of grant. the normal maximum lti is 400 per cent of base salary.

2

our assets

Before deciding on the final outcome for the Ceo (and for other members of the GMC), the Committee first considers the outcome against the pre-determined performance conditions. it then applies its overarching discretion. it can exercise discretion downwards only (i.e. to reduce remuneration).

When the Ceo was appointed in May 2013, the Board advised him that the Committee would exercise its discretion on the basis

of what it considered to be a fair and commensurate remuneration level to decide if the outcome should be reduced.

to be fair to the individual, remuneration levels need to

image

accurately reflect the Ceo’s responsibilities and contributions. to be commensurate with the expectations of shareholders, remuneration levels need to reflect the expectations of our shareholders that their Company’s funds would be used to remunerate our employees in

3 Corporate Governance Statement

a way that is proportionate to both performance and overall value.

in this way, the Committee believes it can set a remuneration level for the Ceo that is sufficient to incentivise him and that is also fair to him and commensurate with shareholder expectations and prevailing market conditions. these same considerations led the Committee to set the incoming Ceo’s remuneration when

he was appointed in 2013 at a lower level than the previous level for this role.

the diagram below shows the relative proportion of each remuneration component for the Ceo if the minimum, target and maximum levels of performance were achieved.


100%

Minimum


Target


Maximum

2,217


29%


36%

4

Remuneration Report

7,725


image

35%

52%

13,097


image

31%

17%

0 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000

image

5

Directors’ Report

Total remuneration (US$’000)

image

image

image

Fixed remuneration (1) STI (2) LTI (3)



image

  1. Fixed remuneration comprises base salary (uS$1.700 million per annum), pension contributions (25 per cent of base salary) and other benefits (uS$0.092 million). the amount included for other benefits is based on FY2014 actual figures for the Ceo, excluding non-recurring items.

  2. the Sti target amount is based on target performance of 160 per cent of base salary. the Sti maximum amount is based on a maximum award of 240 per cent of base salary. the impact of potential future share price movements (up and down) on the value of deferred Sti awards is not included.

  3. the lti amount (target and maximum) is based on the Ceo’s normal maximum award equal to the face value of 400 per cent of base salary, which is lower than the maximum permissible award size under the plan rules. the ‘target’ value for the lti award is based on the fair value of the award, which is 41 per cent of

the face value, as this is the expected outcome on the balance of probabilities for the current plan design as calculated by the independent adviser to the Remuneration Committee, Kepler Associates. the minimum value for the lti award is zero, and applies where the relative tSR of BHP Billiton is lower than the Peer Group and/or index tSR (as applicable for each grant). the impact of potential future share price movements (up and down) on the value of lti awards is not included.

image Section 4.3.3 for more information on the components of remuneration for the CEO



      1. Service contracts and policy on loss of office

        the terms of employment for the Ceo are formalised in his employment contract. Key terms of the current contract and relevant payments on loss of office are shown below. if a new Ceo or another executive Director was appointed, similar contractual terms would apply, other than where the Remuneration Committee determines that different terms should apply for reasons specific to the individual.

        image

        the Ceo’s contract has no fixed term. it can be terminated by BHP Billiton on 12 months’ notice. BHP Billiton can terminate the contract immediately by paying base salary plus pension contributions for the notice period. the Ceo must give six months’ notice for voluntary resignation. the table below sets out the basis on which payments on loss of office may be made.


        image

        Voluntary resignation Termination for cause


        Leaving reason (1)(2)

        image

        Death, serious injury, disability or illness (3)


        Cessation of employment with the agreement of the Board (4)

        image

        Base salary • Base salary for the notice period will be paid as a lump sum or progressively over the notice period.

        • no payment will be made. • Base salary will be paid for

        a period of up to four months, after which time employment may cease.

        • Base salary for the notice period will be paid as a lump sum or progressively over the notice period.

          Pension • Pension contributions for

          image

          the notice period will be paid as a lump sum or progressively over the notice period.

          Benefits • Applicable benefits may continue to be provided during the notice period.

          • Accumulated annual leave

        • no pension contributions will be provided from the date of termination.


        • no benefits will be provided.

        • Accumulated annual leave entitlements and any statutory payments will be paid.

        • Pension contributions will be paid for a period of up to

          four months, after which time employment may cease.

        • Applicable benefits may continue to be provided during the notice period.

        • Accumulated annual leave

          • Pension contributions for the notice period will be paid as a lump sum or progressively over the notice period.

          • Applicable benefits may continue to be provided for the relevant year in which employment ceases.

          • Accumulated annual leave

            entitlements and any statutory • Applicable expenses may

            entitlements and any statutory

            entitlements and any statutory

            payments will also be paid.

            • Applicable expenses may be paid for repatriation

              to the home location where a relocation has been requested by BHP Billiton.

              image

            • unvested Shareplus Matched Shares will lapse.

        be paid for repatriation

        to the home location where a relocation has been requested by BHP Billiton.

        • unvested Shareplus Matched Shares will lapse.

          payments will also be paid.

          • Applicable expenses may be paid for repatriation

          to the home location where a relocation has been requested by BHP Billiton.

          • unvested Shareplus Matched Shares will vest in full.

          payments will also be paid.

          • Applicable expenses may be paid for repatriation to the home location where a relocation has been requested by BHP Billiton.

          • unvested Shareplus Matched Shares will vest in full.

          STI

          Where Ceo leaves during the financial year or after the end of the financial year, but before an award is provided.

        • no Sti will be paid. • no Sti will be paid. • the Committee may determine

          in its discretion to pay

          an amount in respect of the participant’s performance for that year.

          • the Committee may determine

            in its discretion to pay an amount in respect of the participant’s performance for that year.

            unvested StiP equity • Will lapse. • Will lapse. • Will vest in full. • Will continue to be held, on the

            existing terms, for the scheduled deferral period before vesting (subject to a Committee discretion to lapse some or all of the award).

            • the awards remain subject to malus and clawback.

              Vested but unexercised StiP equity

              • Will remain exercisable for the rest of the exercise

              period, unless the Committee determines they will lapse.

          • Will remain exercisable for

            the rest of the exercise period, unless the Committee determines they will lapse.

        • Will remain exercisable for the rest of the exercise period.

          • Will remain exercisable for the rest of the exercise period or for a reduced exercise period, unless the Committee determines they will lapse.

            unvested GiS equity • Will lapse. • Will lapse. • Will vest in full. • Will vest in full, except in the case

            of a leaving reason not specified in the plan rules, in which case the Committee has discretion

            to determine the treatment of equity awards.

            Vested GiS options (with a market-based

            exercise price) previously provided to the Ceo –

            image

            if still held on leaving.

        • Will be retained for the scheduled exercise period, and on the existing terms.

          • Will lapse. • Will be retained for the scheduled exercise period, and on the existing terms.

            • Will be retained for the scheduled exercise period, and on the existing terms.

              LTI

              unvested awards

              • Will lapse. • Will lapse. • Will vest in full. • A pro rata portion of unvested

                awards (based on the proportion of the performance period served) will continue to be held subject to the ltiP rules and terms of grant. the balance will lapse.

                • the awards remain subject to malus and clawback.

                  Vested but unexercised awards

            • Will remain exercisable for the rest of the exercise

              period, unless the Committee determines they will lapse.

        • Will remain exercisable for

          the rest of the exercise period, unless the Committee determines they will lapse.

        • Will remain exercisable for the rest of the exercise period.

          • Will remain exercisable for the rest of the exercise period, or for a reduced exercise period, unless the Committee determines they will lapse.


            image

            1. if the Committee considers it to be necessary, BHP Billiton may enter into agreements with a Ceo which may include the settlement of liabilities in return for payment(s), including reimbursement of legal fees subject to appropriate conditions; or to enter into new arrangements with the departing Ceo (for example, entering into consultancy arrangements).

            2. in the event of a change in control event (e.g. takeover, compromise or arrangement, winding up of the Company) as defined in the StiP and ltiP rules:

              • base salary, pension contributions and benefits will be paid until the date of the change of control event;

              • the Committee may determine that a cash payment be made in respect of performance during the current financial year and all unvested Sti equity awards would vest in full; and

              • the Committee may determine that unvested lti awards will either vest to the extent that the Committee determines appropriate (with reference to performance against the performance condition up to the date of the change of control event and expectations regarding future performance) or that the awards be lapsed

                if the Committee determines that the holders will participate in an acceptable alternative employee equity plan as a term of the change of control event.

            3. Defined as occurring when a participant leaves BHP Billiton due to death, serious injury, disability or illness that prohibits continued employment or total and permanent disablement.

            4. Defined as occurring when a participant leaves BHP Billiton due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement with the agreement of the Company, or such other circumstances that do not constitute resignation or termination for cause.

            image

            1

            Strategic Report

            Remuneration policy for Non-executive Directors

            our non-executive Directors are paid in compliance with the uK Corporate Governance Code (2012) and the ASX Corporate Governance Council’s Principles and Recommendations (3rd edition).

      2. Components of remuneration

the following table shows the components of total remuneration for non-executive Directors, the link to strategy, how each component operates, and how performance is assessed and will impact remuneration and the maximum opportunity for each component.


image

Remuneration component

image

and link to strategy Operation and performance framework Maximum (1)

Fees

The use of remuneration consultants

  1. these individuals were not present when matters associated with their own remuneration were considered.

    image Section 3.14.2 for further information regarding the Committee

    the Committee seeks and considers advice from independent remuneration advisers where appropriate. Remuneration consultants are engaged by, and report directly to, the Committee. Potential conflicts of interest are taken into account when remuneration consultants are selected, and their terms of engagement regulate their level of access to, and require their independence from, BHP Billiton’s management. the advice and recommendations of external advisers are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Director.

    Kepler Associates was appointed by the Committee to act as an independent remuneration adviser to provide specialist remuneration advice, and does not provide other services to the Group. Kepler Associates is a member of the uK Remuneration Consultants Group, and adheres to its Code of Conduct. During the year, Kepler Associates provided advice and assistance to the Committee on a wide range of matters, including:

Kepler Associates is the only remuneration consultant appointed by the Committee.

      1. Board oversight and the Remuneration Committee continued

        Remuneration recommendations

        As part of its role, Kepler Associates provided ‘remuneration recommendations’ (as defined in the Australian Corporations Act 2001) to the Committee during the year. each time Kepler Associates provides a remuneration recommendation, Kepler Associates provides a declaration that the remuneration recommendation was made free from undue influence by the individual to whom

        the recommendation relates. the Board considered the processes outlined above, the constraints incorporated into Kepler Associates’ terms of engagement, the implementation of a comprehensive protocol for the engagement of remuneration advisers and the receipt of the declaration of no undue influence. it is satisfied that the remuneration recommendations received from Kepler Associates were made free from undue influence by any member of the KMP to whom the recommendations related.

        total fees paid to Kepler Associates for the above services

        for the period from 1 July 2013 to 30 June 2014 were £125,520, of which £51,920 was for attendance at Committee meetings and commentary on management proposals, and a total of

        £73,600 for the provision of remuneration recommendations and other technical advice and support on executive remuneration.

        Management also appoints external firms from time to time to assist with remuneration benchmarking, data provision and

        the like. While other external firms did provide certain information to management to assist them in deliberations, no remuneration adviser other than Kepler Associates provided remuneration recommendations during the year in relation to KMP.

      2. Prohibition on hedging of BHP Billiton shares and equity instruments

        the Ceo and other members of the GMC are not allowed to protect the value of any unvested BHP Billiton equity awards allocated

        to them under employee programs, or the value of shares and securities held as part of meeting BHP Billiton’s MSR as described below. the policy also prohibits GMC members from using unvested BHP Billiton equity awards as collateral in any financial transaction, including hedging and margin loan arrangements.

        Any securities that have vested and are no longer subject to restrictions or performance conditions may be subject to hedging

      3. Share ownership guidelines and the MSR

        image

        1

        Strategic Report

        the share ownership guidelines and the MSR help to ensure that the interests of directors, executives and shareholders remain aligned. For FY2014:

        • the MSR for the Ceo was 500 per cent of annual gross pre-tax base salary and he met the MSR as at the date of this report;

        • the MSR for other members of the GMC was 300 per cent

          of annual gross pre-tax base salary and they all met the MSR

          as at the date of this report apart from tony Cudmore, tim Cutt, Geoff Healy and Daniel Malchuk.

          image

          2

          our assets

          the value of equity awards and any other securities for the purposes of the MSR is the market value of the underlying shares. unvested employee equity awards do not qualify, and neither do any options with a market-based exercise price.

          the Ceo and other members of the GMC are expected to grow their holdings to the MSR from the scheduled vesting of their employee awards over time. under the policy, employees are not required to meet the holding requirement before awards are allocated to them. Rather, the MSR is tested at the time that shares are to be sold.

          the GMC members are entitled to sell sufficient shares to satisfy tax obligations arising from the granting, holding, vesting, exercise or sale of the employee awards or the underlying shares. However, if a GMC member wishes to sell additional shares, they will be

          prohibited from doing so unless they will meet the MSR after the sale.

          image Section 4.4.27 for details of share ownership information of the CEO and other members of the GMC

          image

          3 Corporate Governance Statement

          Subject to securities dealing constraints, non-executive Directors have agreed to apply at least 25 per cent of their remuneration (base fees plus Committee fees) to the purchase of BHP Billiton shares until they achieve a shareholding equivalent in value to one year’s remuneration. thereafter, they must maintain at least that level of shareholding throughout their tenure. All non-executive Directors met the MSR as at the date of this report.

          image Section 4.4.27 for details of share ownership information of the Non-executive Directors

      4. Statement of voting at the 2013 AGMs

        BHP Billiton’s remuneration resolutions have attracted a high level of support by shareholders. Voting in regard to those resolutions

        put to shareholders at the 2013 AGMs is shown below, in accordance with uK legislation.

        arrangements or used as collateral, provided that consent is

        obtained from BHP Billiton in advance of the employee entering into the arrangement. BHP Billiton treats compliance with this policy as a serious issue, and takes appropriate measures to ensure that the policy is adhered to.

        Votes


        image

        4

        Remuneration Report

        5

        Directors’ Report

        AGM Resolution

        % vote ‘for’

        % vote ‘against’

        withheld (1)

        Remuneration Report

        97.28

        2.72

        19,292,876

        Adoption of new ltiP Rules

        97.22

        2.78

        41,873,567

        Approval of grants to executive Director

        97.28

        2.72

        17,772,663

        1. the sum of votes marked ‘Vote Withheld’ at BHP Billiton Plc’s AGM and votes marked ‘Abstain’ at BHP Billiton limited’s AGM.



          image


          Remuneration outcomes for the Executive Director (the CEO)

          the Ceo remuneration policy that applied in FY2014 is the same as set out in the remuneration policy report, and the remuneration outcomes described below have therefore been provided in accordance with that same policy.

          image Section 4.3 for the remuneration policy for the CEO

      5. Single total figure of remuneration

        this section shows a single total figure of remuneration as prescribed under uK requirements. it is a measure of actual remuneration and is not intended to meet iFRS accounting standards.

        image Section 4.4.19 for the Statutory IFRS Remuneration table

        this measure of remuneration is required to be reported only in relation to the performance of the services of an executive Director. As Andrew Mackenzie assumed the role of Ceo and executive Director in May 2013, the FY2013 figures therefore relate only to a part-year period.


        image

        US dollars (’000) Base salary Benefits STI (1) LTI Pension Total

        Andrew Mackenzie

        FY2014

        1,700

        92

        3,136

        2,635

        425

        7,988


        FY2013

        242

        702

        256

        1,208

        60

        2,468

        (1) Provided half in cash and half in deferred equity as shown in the table below.

        For Mr Mackenzie, the single total figure of remuneration is calculated as set out below.


        image

        image

        FY2013 – 10 May to 30 June 2013 FY2014

        Base salary Base salary earned for the period, based on a full-year base salary in the Ceo role of uS$1.700 million.

        Base salary earned from 1 July 2013 to 30 June 2014 based

        image

        on a full-year base salary of uS$1.700 million as Mr Mackenzie did not receive any salary increase for FY2014.

        Benefits (1)

        image Section 4.3.3 for policy for specific benefits


        image

        STI

        image Section 4.4.6 for how STI is determined


        image

        LTI

        image Section 4.4.7 for the LTI performance condition

        image

        image Section 4.4.8 for LTI awarded during FY2014

        Personal tax return preparation in required countries, a pro-rated portion of private family health insurance, plus the full amount of the uS$0.700 million relocation allowance paid in respect of Mr Mackenzie’s move from the uK to Australia.

        A pro-rated portion of Sti awarded for FY2013 performance.

        Half or uS$0.128 million was provided in cash in September 2013, and half or uS$0.128 million deferred in an equity award, which is due to vest in FY2016.

        A pro-rated portion of the value of 243,126 lti awards that vested on 22 August 2013, based on performance during the five-year period to 30 June 2013. the total value of that award (based on

        a share price on 22 August 2013 of £19.20, converted to uS dollars on that date) plus the associated DeP (of uS$1.017 million) on the date of vesting and exercise was uS$8.480 million.

        the full amount of private family health insurance and personal tax return preparation in required countries provided during FY2014, together with spouse business-related travel.


        Sti awarded for FY2014 performance. Half or uS$1.568 million will be provided in cash in September 2014, and half or uS$1.568 million deferred in an equity award (subject to shareholder approval

        at the 2014 AGMs), which will be due to vest in FY2017.

        the value of 69,600 lti awards that vested on 20 August 2014, based on performance during the five-year period to 30 June 2014. this value of that award is based on a share price on 20 August 2014 of £19.65, (converted to uS dollars on that date) plus the associated DeP of uS$0.359 million.

        Pension BHP Billiton’s contribution to defined contribution pension plans during the period at 25% of base salary.

        BHP Billiton’s contribution to defined contribution pension plans at 25% of base salary.


        image

        (1) Although eligible, the Ceo does not currently participate in Shareplus, for reasons of administrative simplicity in terms of stock exchange dealings and announcements.

        When the components of remuneration are provided

        the following graph illustrates the usual time frame for delivery of the components of remuneration. it shows how Sti and lti outcomes are deferred.


        image

        Timeline for allocation of remuneration components



        LTI


        STI


        Performance measured


        image

        Performance measured


        1. yrs



        Deferred Shares

        2 yrs


        Base salary and pension benefits


        July

        Sep Dec

        Jun

        Aug

        Sep

        Dec

        STI and LTI performance measurement starts

        New base salary effective

        LTI Performance Shares allocated

        STI award determined

        STI cash paid

        STI Deferred Shares allocated



        image

        image

        1

        Strategic Report

      6. FY2014 STI performance outcomes

        image

        the Ceo scorecard for the FY2014 performance year is summarised in the following table. A description of each performance measure and the Ceo’s level of achievement, as determined by the Committee, are shown below the table. the performance range is set for each measure with the level of performance determined on a range of threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are met), and Stretch (where the performance requirements are exceeded).


        Weighting

        Performance for FY2014 Percentage

        image

        Performance measure

        for FY2014

        Threshold Target Stretch

        outcome STI (US$’000)


        HSeC


        20%



        image

        24.0%

        653

        Attributable profit


        40%



        image

        48.8%

        1,327

        Capital project management

        Cost

        10%


        image


        9.7%

        264

        Schedule

        10%


        image


        9.8%

        266

        individual measures


        20%



        image

        23.0%

        626

        Total


        100%



        115.3%

        3,136


        image

        HSEC

        the HSeC KPi for the Ceo is aligned to the Group’s suite of HSeC Five Year Public targets as set out in BHP Billiton’s Sustainability Report. As it has done for several years, the Remuneration Committee sought guidance from the Sustainability Committee when assessing HSeC performance. the Sustainability Committee reviewed performance against each of the designated measures. Consistent with prior years, the Remuneration Committee then took a holistic view of how the Group had performed in critical areas.

        Targets for FY2014

          • Fatalities, environmental and community incidents: nil fatalities and nil actual significant environmental and community incidents.

          • TRIF and occupational illness: improved performance compared with FY2013 results, with severity and trends to be considered

            as a moderating influence on the overall HSeC assessment.

          • Risk management: the Group is to have all material risks with HSeC impacts recorded and controlled, and to have all critical control designs and critical control assessment test plans reviewed by the material risk owners.

          • Health, environment and community initiatives: All assets to achieve 100 per cent of targets in respect of occupational exposure reduction, water and greenhouse gas reduction and local procurement.

            Performance for FY2014

          • Fatalities, environmental and community incidents: no fatalities occurred in FY2014, with a reduction in the number of potential significant events recorded as well. no significant environmental incidents occurred, and while there was a significant community protest at Cerro Matoso (Colombia), it was well managed without any material impact.

          • TRIF and occupational illness: tRiF performance for FY2014 was a significant improvement over FY2013, with a nine per cent reduction to a tRiF of 4.2 for FY2014, partly offset by an increase in occupational illness outcomes of 14 per cent in FY2014 compared with FY2013.

          • Risk management: All material HSeC risks that have been identified are recorded, and critical control assessments have been completed.

          • Health, environment and community initiatives: Greenhouse gas reduction targets set at the commencement of the year were materially exceeded, with outperformance observed across

            BHP Billiton. targets set for reducing occupational health exposures, for water management and local procurement plan development and implementation were achieved.

            Attributable profit

            Profit after taxation attributable to members of the BHP Billiton Group (attributable profit) is the primary measure used by the Board when assessing the Group’s financial performance. For the purposes of assessing the actual reported outcome against a directly

            comparable target, the attributable profit KPi is adjusted for changes in commodity prices, foreign exchange movements and exceptional items to ensure that it appropriately measures outcomes that are within the control and influence of the Group and its executives.

            of these, changes in commodity prices are ordinarily the most material due to volatility in prices and the impact on Group revenue.

            Targets for FY2014: in respect of FY2014, the Board determined a target for attributable profit of uS$13.3 billion, after the adjustments described above.

            Performance for FY2014: Attributable profit of uS$13.8 billion was reported by BHP Billiton, which was in excess of the target. the drivers of this outperformance were higher than expected sales volumes, particularly in iron ore and, to a lesser extent, in Coal, together with positive productivity and cost performance across a range of Businesses, particularly in Aluminium, Manganese

            image

            2

            our assets

            and nickel, and in Coal. these gains were partly offset by the impact of non-cash costs in Copper.

            Capital project management (cost and schedule)

            Capital project management measures based on the cost and

            image

            3 Corporate Governance Statement

            the schedule outcomes for major capital projects in execution are considered to be effective measures of the delivery of our project pipeline, and consistent with other companies in our sector. the cost KPi is adjusted for foreign exchange movements to ensure that it appropriately measures outcomes that are within the control and influence of the Group and its executives.

            Targets for FY2014: in respect of FY2014, the Board determined a target for cost of uS$23.9 billion, after adjusting for foreign exchange movements, and a target for schedule of 36.0 months which are weighted averages of the portfolio of major projects under development.

            image

            4

            Remuneration Report

            Performance for FY2014: the outcome of uS$24.0 billion on cost was slightly behind the target. While the performance outcome on schedule was nominally on target at 36.0 months, the actual outcome was determined to be marginally behind target for the purposes of Sti outcomes. While the majority of major capital projects proceeded in accordance with approved targets, cost budgets were exceeded on certain projects in Copper and iron ore, while favourable cost outcomes were observed in respect of certain other projects in Coal and iron ore. negative impacts on schedule were observed on certain major capital projects in Copper, iron ore and Petroleum and Potash, while certain other projects progressed ahead of approved schedule in iron ore and Coal.

            Individual performance measures for the CEO

            individual measures for the Ceo are determined at the commencement of the financial year. the application of personal, qualitative measures remains an important element of effective performance management. these measures seek to provide a balance between the financial and non-financial performance requirements that maintain our position as a leader in our industry.

            image

            5

            Directors’ Report

            Targets for FY2014: the Ceo’s individual measures for FY2014 comprised contribution to the overall performance of the Group and the management team, and delivery against projects and initiatives within the scope of the Ceo role as set out by the Board, including productivity and cost improvement, enhanced stakeholder relations and portfolio optimisation.

            Performance for FY2014: the Ceo has completed his first full financial year in the role, and is considered by the Committee to have performed well against the individual measures set at the commencement of the year, as set out above. the Ceo has

            contributed positively to the performance of the Company and the GMC, significant productivity improvements have been achieved during FY2014, relations with stakeholders have improved, and the Group’s portfolio optimisation efforts are progressing well.

            Accordingly, the Committee is of the view the Ceo has performed ahead of target on individual measures.


      7. LTI performance outcomes

LTI vested based on performance to June 2014

the five-year performance period for the 2009 lti awards ended on 30 June 2014. the Ceo’s 2009 lti comprised 120,000 awards, subject to achievement of the relative tSR performance condition, and any discretion applied by the Remuneration Committee as described below.

Testing the performance condition

For the award to vest in full, BHP Billiton was required to deliver a tSR that exceeded the Peer Group tSR by an average of 5.5 per cent per year for five years, being 30.7 per cent in total compounded over the five-year performance period from 1 July 2009 to 30 June 2014.

image Section 4.3.3 for the definition of Peer Group TSR

in respect of the 2009 lti, the Peer Group tSR was 42.8 per cent, compared to BHP Billiton’s tSR of 60.6 per cent. Accordingly,

BHP Billiton outperformed its peer companies by 17.8 per cent, and therefore 58 per cent of awards vested. As a result, 69,600 of the Ceo’s 2009 lti award (granted under the former ltiP) vested on 20 August 2014. the closing price of ordinary BHP Billiton limited shares on the lSe on that date was £19.65 and so the value of the vested award was uS$2.635 million, including the associated

DeP of uS$0.359 million in relation to dividends over the five-year performance period in the form of shares (by applying the net cash DeP towards the purchase of ordinary BHP Billiton limited shares for the Ceo).

if BHP Billiton’s relative performance had been equal to or less than the Peer Group tSR, then threshold vesting would not have been achieved, and none of the award would have vested.


image Section 4.4.8 for the 2009 peer group companies

the impact of the tSR outperformance by BHP Billiton was to

add uS$25 billion of shareholder value from 1 July 2009 to 30 June 2014 over and above the weighted average performance of the comparators as shown in the graphs below. Starting from the lti award scheduled to vest next year, being the lti allocated in 2010, relative tSR will be measured against both a peer group, and

also a broader market index.

Application of discretion to reduce vesting

the rules of the ltiP and the terms and conditions of the award give the Committee an overarching discretion to reduce the number of awards that will vest, notwithstanding the fact that the performance condition for partial or full vesting has been met.

in accordance with its overarching discretion, the Committee has considered the tSR outcome in the context of the Group’s performance over the five-year performance period and determined that the recorded tSR outcome is a fair reflection of performance.

this qualitative judgement, which is applied before final vesting

is confirmed, is an important risk management aspect to ensure that vesting is not simply driven by a formula that may give unexpected or unintended remuneration outcomes. the Committee considers

its discretion carefully each year, taking account of the circumstances that are relevant to the five-year period under consideration.

image Section 4.4.25 for a five-year history of BHP Billiton share prices and dividends

the graphs below show BHP Billiton’s performance under the 2009 ltiP performance condition.


image


BHP Billiton outperformance of Index over the 2009 LTIP cycle

35

BHP Billiton vs. Index TSR performance over the 2009 LTIP cycle

image

image

image

140

image

Excess BHP Billiton value creation

30

Index+5.5%

BHP Billiton

Index + 5.5% p.a.

Index


Outperformance of Index TSR, %

25


20


15


10


5


0


-5


-10


-15

120


image

TSR since 1 July 2009, %

100


80


60


40


20


0


17.8% TSR

outperformance

June 10

June 11 June 12 June 13 June 14 Years ended 30 June

June 09 June 10 June 11 June 12 June 13 June 14 Years ended 30 June


image


the graph below shows BHP Billiton’s comparative performance against the ASX 100, FtSe 100 and the MSCi World index.


image

Value of US$100 invested over the 2009 LTIP cycle (with dividends reinvested)


$250 BHP Billiton Limited

image

image

BHP Billiton Plc

US$ TSR rebased to 1 July 2009

$200


FTSE 100

image

ASX 100

image

MSCI World

$150


$100


$50


$0 June 09 June 10 June 11 June 12 June 13 June 14

Years ended 30 June


image

      1. LTI performance outcomes continued

        LTI vested during FY2014 based on performance to June 2013 As detailed in last year’s Remuneration Report, the five-year performance period for the 2008 ltiP ended on 30 June 2013.

        For awards to vest in full, BHP Billiton was required to deliver a tSR that exceeded the Peer Group tSR by an average of 5.5 per cent per year for five years, being 30.7 per cent in total compounded over the five-year performance period. the Peer Group tSR was negative 44.0 per cent, which compared to BHP Billiton’s tSR

        of negative 9.4 per cent. As a result, BHP Billiton outperformed its peer companies by 34.6 per cent, and therefore met the requisite performance condition for full vesting.

        image Section 4.3.3 for the definition of Peer Group TSR image Section 4.4.8 for the 2008 peer group companies

        As described above, the Committee then considered their overarching discretion under the ltiP rules to reduce the number of awards that vested, notwithstanding the fact that the performance condition for full vesting had been met. the Committee, with the support of the Board, exercised that discretion and reduced vesting by 35 per cent for all participants. Accordingly, 35 per cent of the Ceo’s awards did not vest and instead lapsed.

        in applying its discretion, the Committee took into account a range of factors, including the negative tSR over the five-year performance period that shareholders have experienced. While the Committee recognised that the tSR was delivered in a difficult business environment, it also felt that more closely aligning the experience

        of shareholders and executives was important. As always, the Committee also looked at the total remuneration for executives. While the Committee exercised its discretion in respect of the 2008 ltiP vesting, based on its consideration of all relevant factors,

        this does not imply that the discretion will or will not be exercised to reduce the vesting result in future years.

        image Section 4.4.5 for the number and value of vested LTI awards for the CEO

      2. LTI allocated during FY2014

        image

        Following shareholder approval at the 2013 AGMs, an lti award was granted to the Ceo on 18 December 2013. the face value and fair value of the award are shown in the table below.

        • For the whole of either portion of the award to vest, BHP Billiton’s tSR must exceed the Peer Group tSR or the index tSR (as applicable) by an average of 5.5 per cent per annum. this equates to exceeding average tSR over the five-year performance period

          image

          1

          Strategic Report

          by 30.7 per cent. threshold vesting of each portion of the award occurs where BHP Billiton’s tSR equals the Peer Group tSR or index tSR (as applicable).

        • Peer Group tSR is the weighted median tSR for the companies. each company in the peer group is weighted by market capitalisation to ensure that it is represented appropriately within the tSR calculation. the maximum weighting for any one company is capped as 15 per cent and the minimum is set

          at one per cent, to reduce sensitivity to any single peer company.

          image

          2

          our assets

          the sector peer group companies for the FY2014 allocations in December 2013 are below, along with those for prior lti grants.


          Number of


          Face value


          Face value


          Fair value


          Fair value


          image

          3 Corporate Governance Statement


          December

          December


          2008 and 2009 (1)

          2010 to 2012

          December 2013

          Resources (75%) (2)




          Alcoa

          Anglo American

          Cameco

          Consol energy



          Fortescue Metals



          Freeport McMoRan

          Glencore Xstrata (3)

          norilsk

          Peabody energy

          Rio tinto

          Southern Copper

          teck Cominco

          Vale

          Oil and Gas (25%)




          Anadarko Petroleum

          Apache




          BG Group

          BP


          Canadian natural Res.



          Chevron



          ConocoPhillips

          Devon energy eoG Resources





          exxon Mobil


          occidental Petroleum

          Shell




          Woodside Petroleum

          % of

          4

          Remuneration Report

          LTI rights (1)

          US$ (‘000) (2)

          % of salary

          US$ (‘000) (3) % of salary

          max (4)


          image

          198,514 6,800 400 2,788 164 82

          image

          1. the number of lti rights is calculated by dividing the face value by the average closing share price over the 12 months up to and including the grant date (being A$35.33) and rounding down to the nearest number of rights.

          2. the face value of the award was determined as 400 per cent of Andrew Mackenzie’s base salary of uS$1.700 million.

          3. the fair value of the award is calculated by multiplying the face value of

            the award by the fair value factor of 41 per cent (for the current plan design, as determined by Kepler Associates).

          4. the allocation is 82 per cent of the maximum award that may be provided under the ltiP rules. the maximum is a fair value of 200 per cent of base salary, or face value of 488 per cent of base salary, based on the fair value of 41 per cent for the current plan design (488% x 41% = 200%).

          Terms of the LTI award

          image Section 4.3.3 for the terms of LTI that are set in the remuneration policy for the CEO

          in addition to those terms, the Remuneration Committee has determined:

          • the performance period will be 1 July 2013 to 30 June 2018.

          • the share price averaging period of six months will be used in the tSR calculations to account for short-term price fluctuations.

          • BHP Billiton’s performance relative to peers tends to be counter-cyclical. to provide a fair and balanced outcome,

        tSR relative to the weighted average tSR of sector peer companies selected by the Committee (Peer Group tSR) determined the vesting of 67 per cent of the award. tSR relative to the broad MCSi World index (index tSR) will determine the vesting

        of the remaining 33 per cent of the award.


        1. in 2008 and 2009, the share price averaging period used in the tSR calculations to account for short-term price fluctuations was three months. this was extended to six months from the December 2010 grants.

          image

        2. this peer group was the only comparator group for the 2008 and 2009 ltiP grants. the index tSR was introduced as a secondary comparator (for

          image

          5

          Directors’ Report

          33 per cent of the award) from the December 2010 grant.

        3. GlencoreXstrata has replaced Xstrata in the peer group for December 2008 to 2012 awards from the merger of Glencore and Xstrata in May 2013.



      3. CEO remuneration and returns to shareholders

        Five-year CEO remuneration

        the table below shows the total remuneration earned by Andrew Mackenzie and Marius Kloppers over the last five years, along with the proportion of maximum opportunity earned in relation to each type of incentive. As Mr Mackenzie assumed the role of Ceo in May 2013, the FY2013 total remuneration shown relates only to the period 10 May to 30 June 2013. the FY2013 total remuneration for Mr Kloppers relates only to the period 1 July 2012 to 10 May 2013.

        image Section 4.4.5 for the methodology used to calculate the single total figure of remuneration as used in this table


        Financial year

        FY2010

        FY2011

        FY2012

        FY2013

        FY2014

        Andrew Mackenzie






        total remuneration (single figure, $’000)

        2,468

        7,988

        Sti (% of maximum)

        47

        77

        lti (% of maximum)

        65

        58

        Marius Kloppers






        total remuneration (single figure, $’000)

        14,789

        15,755

        16,092

        15,991

        Sti (% of maximum)

        71

        69

        0

        47

        lti (% of maximum)

        100

        100

        100

        65


        Five-year TSR

        the graph below shows BHP Billiton’s tSR against the performance of relevant indices over the same five-year period. the indices shown in the graph were chosen as being broad market indices which include companies of a comparable size and complexity to BHP Billiton.


        image

        Value of US$100 invested over the 2009 LTIP cycle (with dividends reinvested)


        $250 BHP Billiton Limited

        image

        image

        BHP Billiton Plc

        US$ TSR rebased to 1 July 2009

        $200


        $150


        $100


        $50


        $0 June 09 June 10 June 11 June 12 June 13 June 14

        Years ended 30 June

        FTSE 100

        image

        ASX 100

        image

        MSCI World



        image


      4. Change in CEO’s remuneration in FY2014

        the table below sets out the Ceo’s base salary, benefits and Sti amounts earned in respect of FY2014, with the percentage change from FY2013. the table also shows the average change in each element for employees of the Group in Australia (being approximately 26,500 employees). this has been chosen by the Committee as the most appropriate comparison, as the Ceo is located in Australia.



        Base salary

        Benefits

        STI

        CEO

        $’000

        1,700

        92

        3,136


        % change (1)

        0.0

        (87.0)

        23.2

        Australian employees

        % change (average)

        2.3

        (10.0)

        17.9

        (1) the percentage changes for the Ceo have been determined with reference to annualised numbers for FY2013.

        image

        1

        Strategic Report

      5. Remuneration for the CEO in FY2015

        Subject to approval of the remuneration policy by shareholders at the 2014 AGMs, the remuneration for the Ceo in FY2015 will be provided in accordance with that policy.

        image Section 4.3.3 for the remuneration policy for the CEO

        Base salary increase in September 2014

        Base salary is reviewed annually, and increases are applicable from 1 September. the Ceo will not receive a base salary increase in September 2014 and it will remain unchanged at uS$1.700 million per annum for FY2015.

        FY2015 STI performance measures

        Sti awards will be determined and provided on the same basis as set out for FY2014, and the HSeC, attributable profit, capital project management and individual performance measures are unchanged.

        image Section 4.4.6 for a description of STI for FY2014, including the performance measures

        image

        the performance measures set out in the table below have been set by the Remuneration Committee for the Ceo in FY2015.


        image

        2

        our assets

        Performance measure Weighting Target performance

        image

        HSeC 20% • Fatalities, Environment and Community Incidents: nil fatalities and nil actual significant environmental and community incidents.

        • TRIF and Occupational Illness: improved performance compared with FY2014 results, with severity and trends to be considered as a moderating influence on the overall HSeC assessment.

        • HSEC Risk Management: each Business is to have all material risks with HSeC impacts recorded and controlled. For all material risks Businesses to have all critical control designs and critical control assessment test plans reviewed by the material risk owner.

          image

          3 Corporate Governance Statement

        • Health, Environment and Community Initiatives: All assets to achieve 100% of planned targets in respect of occupational exposure reduction, water and greenhouse gas projects reduction and local procurement and cultural awareness targets.

          Attributable profit

          (adjusted for commodity prices, foreign exchange movements and exceptional items)

          40%

          Capital project management (cost and schedule)

          20%

          individual performance

          20%

          • For reasons of commercial sensitivity, the target for attributable profit will not be disclosed in advance; however, we plan to disclose targets and outcomes retrospectively. in the rare instances where this may not be prudent or grounds of commercial sensitivity, we will explain why and give an indication of when they will be disclosed.

          • For reasons of commercial sensitivity, the targets for capital project management cost and schedule will not be disclosed in advance; however, we plan to disclose targets and outcomes retrospectively. in the rare instances where this may not be prudent or grounds of commercial sensitivity, we will explain why and give an indication of when they will be disclosed.

          • the Ceo’s individual measures for FY2015 comprise contribution to BHP Billiton’s overall performance

          and the management team, and the delivery of projects and initiatives within the scope of the Ceo role as set out by the Board, including portfolio optimisation and simplification, capital management, improvement in leadership capabilities and employee engagement throughout the Group, and GMC member development and succession.

          image


          FY2015 LTI award

          on the advice of the Committee, the Board has proposed an FY2015 lti award for the Ceo with a face value of uS$6.800 million, being 400 per cent of the Ceo’s base salary. taking into account the performance condition as represented by the fair value factor of 41 per cent, the fair value of these awards is uS$2.788 million.

          image

          4

          Remuneration Report

          the FY2015 lti award will use the same performance and service conditions, vesting schedule and peer groups as the FY2014 lti award.

          image Section 4.4.8 for a description of LTI for FY2014

          5

          Directors’ Report

          if approved by shareholders, this FY2015 lti award will be granted following the AGMs (i.e. in or around December 2014). the number of awards will be notified to shareholders at the time that they are provided.


          image


          Remuneration outcomes for Non-executive Directors

          the remuneration policy for the non-executive Directors set out in the remuneration policy report also applied in FY2014, and the remuneration outcomes described below have therefore been provided in accordance with that same policy.

          image Section 4.3.9 for the remuneration policy for the Non-executive Directors

          the maximum aggregate fees payable to non-executive Directors (including the Chairman) was approved by shareholders at the 2008 AGMs at uS$3.8 million per annum. this sum includes base fees, committee fees and pension contributions. travel allowances and non-monetary benefits are not included in this limit.

      6. Single total figure of remuneration

        this section shows a single total figure of remuneration as prescribed under uK requirements. it is a measure of actual remuneration. As non-executive Directors do not receive any equity awards as part of their remuneration, this table also meets the requirements of the Australian Corporations Act 2001 and relevant accounting standards.


        US dollars (‘000)


        Fees (1)

        Benefits (2)

        Pension (3)

        Total

        Malcolm Brinded (4)

        2014

        42

        15

        57

        Malcolm Broomhead

        2014

        230

        75

        12

        317


        2013

        230

        59

        12

        301

        John Buchanan

        2014

        263

        84

        347


        2013

        263

        67

        330

        Carlos Cordeiro

        2014

        198

        103

        301


        2013

        198

        115

        313

        David Crawford

        2014

        230

        69

        12

        311


        2013

        230

        88

        12

        330

        Pat Davies

        2014

        198

        88

        286


        2013

        198

        118

        316

        Carolyn Hewson

        2014

        214

        48

        12

        274


        2013

        203

        60

        10

        273

        lindsay Maxsted

        2014

        263

        53

        14

        330


        2013

        263

        69

        14

        346

        Wayne Murdy

        2014

        235

        113

        348


        2013

        235

        161

        396

        Jac nasser

        2014

        1,100

        114

        1,214


        2013

        1,100

        107

        1,207

        Keith Rumble

        2014

        198

        129

        327


        2013

        198

        154

        352

        John Schubert

        2014

        243

        45

        13

        301


        2013

        243

        90

        12

        345

        Shriti Vadera

        2014

        203

        79

        282


        2013

        203

        93

        296

        1. Fees include the annual base fee, plus additional fees as applicable for the Senior independent Director, Committee Chairs and Committee memberships.

          image Section 4.4.13 for details of the fee structure for FY2013 and FY2014

        2. the majority of the amounts disclosed for benefits are travel allowances for each non-executive Director: amounts of between uS$15,000 and uS$112,000 (uS$59,000 and uS$119,000 for FY2013). in addition, amounts of between uS$ nil and uS$5,000 (uS$ nil and uS$5,000 for FY2013) are included in respect of tax return preparation; amounts of between uS$ nil and uS$32,000 (uS$ nil and uS$25,000 for FY2013) are included in respect of costs associated with spouse/partner attendance at a business meeting location; and amounts of between uS$ nil and uS$19,000 (uS$ nil and uS$16,000 for FY2013) are included in respect of reimbursement of the tax

          cost associated with the provision of taxable benefits.

        3. BHP Billiton limited made minimum superannuation contributions of 9.25 per cent of fees for FY2014 in accordance with Australian superannuation legislation (increasing to 9.5 per cent of fees paid in FY2015).

        4. the FY2014 remuneration for Malcolm Brinded relates to part of that year only, as he joined the Board on 15 April 2014.

        image

        1

        Strategic Report

      7. Non-executive Directors’ remuneration in FY2015

        Subject to approval of the remuneration policy by shareholders at the 2014 AGMs, the remuneration for the non-executive Directors in FY2015 will be provided in accordance with that policy.

        image Section 4.3.9 for the remuneration policy for the Non-executive Directors

        Fees for the non-executive Directors are determined by the Chairman and the Ceo. the non-executive Directors do not take part in these discussions. Fees for the Chairman are determined by the Board on the recommendation of the Remuneration Committee.

        2

        our assets

        Fees for the non-executive Directors and Chairman were reviewed in June 2014 and benchmarked against peer companies, with the assistance of externally provided benchmark data. As a result of the review, a decision was taken to keep FY2015 fees unchanged from FY2014. the table below sets out the fee levels for FY2015, and the changes in fee levels since FY2011.


        Levels of fees and travel allowances for


        Non-executive Directors (in US dollars)

        From 1 July 2010

        From 1 July 2011

        From 1 July 2012

        From 1 July 2013

        From 1 July 2014

        Base annual fee

        154,000

        170,000

        170,000

        170,000

        170,000

        Plus additional fees for:






        Senior Independent Director of BHP Billiton Plc

        35,000

        48,000

        48,000

        48,000

        48,000

        Committee Chair:






        Risk and Audit

        55,000

        60,000

        60,000

        60,000

        60,000

        Finance (1)

        60,000

        60,000

        60,000

        Remuneration

        40,000

        45,000

        45,000

        45,000

        45,000

        Sustainability

        40,000

        45,000

        45,000

        45,000

        45,000

        nomination

        no additional fees

        no additional fees

        no additional fees

        no additional fees

        no additional fees

        Committee membership:






        Risk and Audit

        30,000

        32,500

        32,500

        32,500

        32,500

        Finance (1)

        32,500

        32,500

        32,500

        Remuneration

        25,000

        27,500

        27,500

        27,500

        27,500

        Sustainability

        25,000

        27,500

        27,500

        27,500

        27,500

        nomination

        no additional fees

        no additional fees

        no additional fees

        no additional fees

        no additional fees

        Travel allowance: (2)






        Greater than 3 but less than 10 hours

        7,000

        7,000

        7,000

        7,000

        7,000

        10 hours or more

        15,000

        15,000

        15,000

        15,000

        15,000

        Chairman’s remuneration

        1,000,000

        1,100,000

        1,100,000

        1,100,000

        1,100,000

        image

        image

        3 Corporate Governance Statement

        1. the Finance Committee was created on 23 April 2012, and the fees shown are annualised and commenced from that date.

          image

          4

          Remuneration Report

          5

          Directors’ Report

        2. in relation to travel for Board business, the time thresholds relate to the flight time to travel to the meeting location (i.e. one way flight time). until 30 June 2011, the time frames were ‘Greater than 3 but less than 12 hours’ and ‘12 hours or more’.



        image


        Remuneration for members of the GMC (other than the CEO)


        the information in this section contains details of the remuneration policy that guided the Remuneration Committee’s decisions and resulted in the remuneration outcomes for members of the GMC, other than the Ceo (or any other executive Directors should any

        be appointed in future).

        image Section 4.2.1 for members of the GMC

        the remuneration policy and structures for the other members of the GMC are essentially the same as those already described for the Ceo in previous sections of the Remuneration Report. Where this is the case, to avoid repetition, this section of the report cross references that prior content.

      8. Remuneration policy

        in designing and determining the remuneration for members of the GMC, the Remuneration Committee applies the Group’s

        remuneration policy. this contains the key principles that support and reinforce the Group’s strategy and ongoing performance and align activities of management with the interests of shareholders.

        image Section 4.3.1 and 4.3.2 for overarching principles and purpose of remuneration at BHP Billiton

        the Remuneration Committee considers the appropriate total remuneration for each member of the GMC by examining the remuneration provided to comparable roles in organisations of similar global complexity, size, reach and industry.

        each year, the Committee’s independent adviser, Kepler Associates, sources and consolidates relevant remuneration data for comparable roles, in relevant organisations and markets. the adviser prepares

        a comparison to current GMC remuneration, but does not make specific recommendations regarding the level of individual executives’ remuneration.

        image Section 4.4.1 for more information on services provided by Kepler Associates

        From this market comparison, the Committee determines the appropriate remuneration for each individual, taking into account their responsibilities, location, skills, qualifications, experience and performance within the Group. in doing so, the Committee recognises that levels of remuneration should be sufficient to attract, motivate and retain high quality, experienced executives,

        but also that the Group should avoid paying more than is necessary for this purpose.


        image

        FY2014 performance measures and outcomes

      9. Components of remuneration

the components of remuneration for members of the GMC

are the same as the Ceo, with any differences described below.

image Section 4.3.3 for the components of CEO remuneration (including how remuneration links to strategy, how each component operates and how performance is assessed)

Fixed remuneration

As for the Ceo, the other members of the GMC receive:

office audit team. These materiality levels were set individually for each such component and do not exceed US$650 million.

of expressing an opinion on the effectiveness of the entity’s internal control.

This report is made subject to important explanations regarding our responsibilities, as published on our website at

image

, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Report on Other Legal and Regulatory Requirements

    1. KPMG UK’s opinions on matters prescribed by the UK Companies Act 2006 and under the terms of our engagement are unmodified

      In our opinion:

      • the Directors’ Remuneration Report set out in section 4 of the Annual Report has been properly prepared in accordance with the UK Companies Act 2006;

      • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

      • the information given in the Corporate Governance Statement set out in section 3 of the Annual Report with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with

        the financial statements.

    2. KPMG UK has nothing to report in respect of the matters on which we are required to report by exception

      Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the Annual Report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.

      In particular, we are required to report to you if:

        • we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors’ statement that they consider that the Annual Report and financial statements taken

          as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy; or

        • the Risk and Audit Committee report does not appropriately address matters communicated by us to the Risk and Audit Committee.

          Under the UK Companies Act 2006 we are required to report to you if, in our opinion:

        • adequate accounting records have not been kept by BHP Billiton Plc, or returns adequate for our audit have not been received from branches not visited by us; or

        • the BHP Billiton Plc company financial statements and the Directors’ Remuneration Report are not in agreement with the accounting records and returns; or

        • certain disclosures of Directors’ remuneration specified by law are not made; or

        • a separate Corporate Governance Statement has not been prepared by the company; or

        • we have not received all the information and explanations we require for our audit.

          Under the UK Listing Rules we are required to review:

        • the Directors’ statement, set out in section 5.3 of the Directors’ Report, in relation to going concern; and

        • the part of the Corporate Governance Statement relating

      to BHP Billiton Plc’s compliance with the nine provisions of the 2010 UK Corporate Governance Code specified for our review.

      We have nothing to report in respect of the above responsibilities.

    3. KPMG Australia’s opinion on the Remuneration Report is unmodified

      image

      6

      Legal proceedings

      We have audited the Remuneration Report set out in section 4 of the Annual Report. The Directors of BHP Billiton Limited are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Australian Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

      In our opinion, the Remuneration Report of the Group for the year ended 30 June 2014 complies with Section 300A of the Australian Corporations Act 2001.

      image

      7

      Financial Statements

      The purpose of this report and restrictions on its use by persons other than the members of BHP Billiton Plc as a body and BHP Billiton Limited as a body

      KPMG UK’s report is made solely to BHP Billiton Plc’s members, as

      a body, in accordance with Chapter 3 of Part 16 of the UK Companies Act 2006 and, in respect of the opinion in relation to IFRSs as issued by the IASB, on terms that have been agreed. KPMG Australia’s report is made solely to BHP Billiton Limited’s members, as a body, in accordance with the Australian Corporations Act 2001. Our audit work has been undertaken so that we might state to the members of each company those matters we are required to state to them in an auditor’s report and those matters that we have each agreed to state to them in respect of the opinion in relation to IFRSs as issued by the IASB. Accordingly, each of KPMG UK and KPMG Australia makes the following statement: to the fullest extent permitted by law: we do

      image

      image

      8

      Glossary

      not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for our report, or for the opinions we have formed.


      Stephen Oxley (Senior Statutory Auditor)

      For and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants

      London

      11 September 2014


      image

      image

      9

      Shareholder information

      KPMG


      image

      Martin Sheppard

      Partner

      Melbourne

      11 September 2014


      KPMG, an Australian partnership and KPMG LLP, a UK limited liability partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity.

      KPMG Australia’s liability limited by a scheme approved under Professional Standards Legislation.


      BHP BILLITON ANNUAL REPORT 2014 — 313


      image

        1. Supplementary oil and gas information – unaudited

          In accordance with the requirements of the Financial Accounting Standards Board (FASB) Accounting Standard Codification ‘Extractive Activities-Oil and Gas’ (Topic 932) and SEC requirements set out in Subpart 1200 of Regulation S-K, the Group is presenting certain disclosures about its oil and gas activities. These disclosures are presented below as supplementary oil and gas information, in addition to information disclosed in section 1.12.2 ‘Petroleum and Potash Business’, section 2.1.1 ‘Petroleum and Potash Business’, section 2.2.1 ‘Production – Petroleum’ and section 2.3.1 ‘Petroleum reserves’.

          The information set out in this section is referred to as unaudited as it is not included in the scope of the audit opinion of the independent auditor on the Consolidated Financial Statements, refer section 7.6 Independent Auditors’ reports.


          Reserves and production

          Proved oil and gas reserves and net crude oil and condensate, natural gas, LNG and NGL production information is included in section 2.2.1 ‘Production – Petroleum’ and section 2.3.1 ‘Petroleum reserves’ of this Annual Report.


          Capitalised costs relating to oil and gas production activities

          The following table shows the aggregate capitalised costs relating to oil and gas exploration and production activities and related accumulated depreciation, depletion, amortisation and valuation allowances.


          image

          United


          Australia

          States

          Other (b)

          Total

          US$M

          US$M

          US$M

          US$M

          Capitalised cost 2014

          unproved properties


          344


          7,355


          200


          7,899

          Proved properties

          14,801

          34,963

          2,388

          52,152

          Total costs

          15,145

          42,318

          2,588

          60,051

          Less: Accumulated depreciation, depletion, amortisation and valuation allowances

          (7,135)

          (13,269)

          (2,021)

          (22,425)

          Net capitalised costs

          8,010

          29,049

          567

          37,626

          2013 (a)

          unproved properties


          279


          7,875


          154


          8,308

          Proved properties

          13,870

          29,781

          3,871

          47,522

          Total costs

          14,149

          37,656

          4,025

          55,830

          Less: Accumulated depreciation, depletion, amortisation and valuation allowances

          (6,512)

          (10,258)

          (3,314)

          (20,084)

          Net capitalised costs

          7,637

          27,398

          711

          35,746

          2012 (a)

          unproved properties


          363


          11,800


          155


          12,318

          Proved properties

          12,572

          19,850

          3,846

          36,268

          Total costs

          12,935

          31,650

          4,001

          48,586

          Less: Accumulated depreciation, depletion, amortisation and valuation allowances

          (5,973)

          (7,413)

          (3,211)

          (16,597)

          Net capitalised costs

          6,962

          24,237

          790

          31,989

          1. Comparative information for 2013 and 2012 has been restated on account of adoption of IFRS 10 and 11. The impact to net capitalised costs was a reduction of uS$121 million in 2013 and uS$124 million in 2012.

          2. Other is primarily comprised of Algeria, Brazil, Pakistan, Trinidad and Tobago and the united Kingdom.

image

6

Legal proceedings

Costs incurred relating to oil and gas property acquisition, exploration and development activities

The following table shows costs incurred relating to oil and gas property acquisition, exploration and development activities (whether charged to expense or capitalised). Amounts shown include interest capitalised.


image

United

image

7

Financial Statements


US$M

US$M

US$M

US$M

2014





Acquisitions of proved property

Acquisitions of unproved property

35

217

42

294

Exploration (a)

185

242

97

524

Development

949

5,034

75

6,058

Total costs (b)

1,169

5,493

214

6,876

2013





Acquisitions of proved property

Acquisitions of unproved property

123

123

Exploration (a)

125

373

221

719

Development

1,410

5,698

66

7,174

Total costs (b)

1,535

6,194

287

8,016

2012





Acquisitions of proved property

4,746

4,746

Acquisitions of unproved property

5

10,366

10,371

Exploration (a)

251

690

331

1,272

Development

1,663

4,460

102

6,225

Total costs (b)

1,919

20,262

433

22,614

Australia States Other (c) Total


image

8

Glossary

  1. Represents gross exploration expenditure, including capitalised exploration expenditure, in addition to exploration and evaluation costs charged to income as incurred.

  2. Total costs include uS$6,387 million (2013: uS$7,393 million; 2012: uS$6,905 million) capitalised during the year.

    9

    Shareholder information

  3. Other is primarily comprised of Algeria, Pakistan, Trinidad and Tobago and the united Kingdom.



image



Results of operations from oil and gas producing activities

The following information is similar to the disclosures in note 2 ‘Segment reporting’ of the BHP Billiton Group, but differs in several respects as to the level of detail and geographic information. Amounts shown in the following table exclude financial income, financial expenses, and general corporate overheads.

Income taxes were determined by applying the applicable statutory rates to pre-tax income with adjustments for permanent differences and tax credits.


image

United

Australia States Other (g) Total


US$M

US$M

US$M

US$M

2014

Oil and gas revenue (a)


5,722


7,517


1,045


14,284

Production costs

(740)

(2,129)

(246)

(3,115)

Exploration expenses

(157)

(233)

(99)

(489)

Depreciation, depletion, amortisation and valuation provision (b)

(617)

(3,465)

(172)

(4,254)

Production taxes (c)

(340)

(29)

(369)


3,868

1,690

499

6,057

Income taxes

(1,025)

(353)

(413)

(1,791)

Royalty-related taxes (d)

(662)

8

(654)

Results of oil and gas producing activities (e)

2,181

1,337

94

3,612

2013 (f)

Oil and gas revenue (a)


5,794


5,807


1,332


12,933

Production costs

(753)

(1,693)

(256)

(2,702)

Exploration expenses

(122)

(278)

(223)

(623)

Depreciation, depletion, amortisation and valuation provision (b)

(561)

(2,809)

(141)

(3,511)

Production taxes (c)

(362)

1

(361)


3,996

1,027

713

5,736

Income taxes

(1,265)

(162)

(637)

(2,064)

Royalty-related taxes (d)

(822)

8

(814)

Results of oil and gas producing activities (e)

1,909

865

84

2,858

2012 (f)

Oil and gas revenue (a)


6,233


4,889


1,580


12,702

Production costs

(684)

(1,225)

(354)

(2,263)

Exploration expenses

(156)

(275)

(304)

(735)

Depreciation, depletion, amortisation and valuation provision (b)

(707)

(4,961)

(218)

(5,886)

Production taxes (c)

(342)

(30)

(372)


4,344

(1,572)

674

3,446

Income taxes

(1,332)

745

(534)

(1,121)

Royalty-related taxes (d)

(641)

(3)

(644)

Results of oil and gas producing activities (e)

2,371

(827)

137

1,681

  1. Includes sales to affiliated companies of uS$262 million (2013: uS$ nil; 2012: uS$ nil).

  2. Includes a valuation provision of uS$309 million (2013: uS$447 million; 2012: uS$2,986 million).

  3. Includes royalties and excise duty.

  4. Includes petroleum resource rent tax and petroleum revenue tax where applicable.

  5. Amounts shown exclude financial income, financial expenses and general corporate overheads and, accordingly, do not represent all of the operations attributable to the Petroleum and Potash segment presented in note 2 Segment reporting to the financial statements.

  6. Comparative information for 2013 and 2012 has been restated on account of adoption of IFRS 10 and 11. The impact to net results of operations was negative uS$2 million in 2013 and uS$ nil in 2012.

  7. Other is primarily comprised of Algeria, Pakistan, Trinidad and Tobago and the united Kingdom.

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6

Legal proceedings

Standardised measure of discounted future net cash flows relating to proved oil and gas reserves (Standardised measure)

The purpose of this disclosure is to provide data with respect to the estimated future net cash flows from future production of proved developed and undeveloped reserves of crude oil, condensate, natural gas liquids and natural gas.

The Standardised measure is based on the Group’s estimated proved reserves (as presented in section 2.3.1 ‘Petroleum reserves’) and this data should be read in conjunction with that disclosure, which is hereby incorporated by reference into this section. The Standardised measure is prepared on a basis which presumes that year-end economic and operating conditions will continue over the periods in which year-end proved reserves would be produced. The effects of future inflation, future changes in exchange rates, expected future changes in technology, taxes, operating practices and any regulatory changes have not been included.

The Standardised measure is prepared by projecting the estimated future annual production of proved reserves owned at period end and pricing that future production to derive future cash inflows. Estimates of future cash flows for 2014, 2013 and 2012 are computed using the average first day of the month price during the 12-month period. Future price increases for all periods presented are considered only to the extent

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that they are provided by fixed and determinable contractual arrangements in effect at year-end and are not dependent upon future inflation or exchange rate changes.

7

Financial Statements

Future cash inflows for all periods presented are then reduced by future costs of producing and developing the year-end proved reserves based on costs in effect at year-end without regard to future inflation or changes in technology or operating practices. Future development costs include the costs of drilling and equipping development wells and construction of platforms and production facilities to gain access to proved reserves owned at year-end. They also include future costs, net of residual salvage value, associated with the abandonment of

wells, dismantling of production platforms and rehabilitation of drilling sites. Future cash inflows are further reduced by future income taxes based on tax rates in effect at year-end and after considering the future deductions and credits applicable to proved properties owned at year-end. The resultant annual future net cash flows (after deductions of operating costs including resource rent taxes, development costs and income taxes) are discounted at 10 per cent per annum to derive the Standardised measure.

There are many important variables, assumptions and imprecisions inherent in developing the Standardised measure, the most important of which are the level of proved reserves and the rate of production thereof. The Standardised measure is not an estimate of the fair market

value of the Group’s oil and gas reserves. An estimate of fair value would also take into account, among other things, the expected recovery of reserves in excess of proved reserves, anticipated future changes in prices, costs and exchange rates, anticipated future changes in secondary tax and income tax rates and alternative discount factors representing the time value of money and adjustments for risks inherent in producing oil and gas.


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8

Glossary

9

Shareholder information

Australia

States

Other (a)

Total

US$M

US$M

US$M

US$M

Standardised measure




2014




Future cash inflows 47,633

70,958

3,820

122,411

Future production costs (11,355)

(19,732)

(717)

(31,804)

Future development costs (5,772)

(12,953)

(516)

(19,241)

Future income taxes (12,240)

(10,527)

(1,394)

(24,161)

Future net cash flows 18,266

27,746

1,193

47,205

Discount at 10 per cent per annum (6,880)

(10,866)

(295)

(18,041)

Standardised measure 11,386

16,880

898

29,164

2013




Future cash inflows 48,862

71,836

5,194

125,892

Future production costs (12,818)

(19,194)

(1,147)

(33,159)

Future development costs (6,801)

(11,946)

(473)

(19,220)

Future income taxes (11,321)

(12,185)

(1,913)

(25,419)

Future net cash flows 17,922

28,511

1,661

48,094

Discount at 10 per cent per annum (6,176)

(12,785)

(360)

(19,321)

Standardised measure 11,746

15,726

1,301

28,773

2012




Future cash inflows 52,777

67,811

6,293

126,881

Future production costs (12,646)

(17,582)

(1,339)

(31,567)

Future development costs (8,612)

(13,212)

(450)

(22,274)

Future income taxes (11,882)

(10,414)

(2,345)

(24,641)

Future net cash flows 19,637

26,603

2,159

48,399

Discount at 10 per cent per annum (7,363)

(13,090)

(469)

(20,922)

Standardised measure 12,274

13,513

1,690

27,477

(a) Other is primarily comprised of Algeria, Pakistan, Trinidad and Tobago and the united Kingdom.




United



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Standardised measure of discounted future net cash flows relating to proved oil and gas reserves (Standardised measure) continued

Changes in the Standardised measure are presented in the following table. The beginning of the year and end of the year totals are shown after reduction for income taxes and these, together with the changes in income tax amounts, are shown as discounted amounts (at 10 per cent per annum). All other items of change represent discounted amounts before consideration of income tax effects.



2014

US$M

2013

uS$M

2012

uS$M

Changes in the Standardised measure




Standardised measure at the beginning of the year

28,773

27,477

19,920

Revisions:




Prices, net of production costs

4,366

189

4,132

Changes in future development costs

(841)

940

(987)

Revisions of quantity estimates (a)

(3,871)

(4,396)

5,265

Accretion of discount

4,564

4,323

3,134

Changes in production timing and other

(1,170)

260

426


31,821

28,793

31,890

Sales of oil and gas, net of production costs

(10,800)

(9,876)

(10,093)

Acquisitions of reserves-in-place

5,661

Sales of reserves-in-place

(107)

(16)

Previously estimated development costs incurred

2,683

3,710

3,416

Extensions, discoveries, and improved recoveries, net of future costs

3,946

7,272

946

Changes in future income taxes

1,621

(1,126)

(4,327)

Standardised measure at the end of the year

29,164

28,773

27,477

(a) Changes in reserves quantities are shown in the Petroleum reserves tables in section 2.3.1.





Accounting for suspended exploratory well costs

Refer to note 1 ‘Accounting policies’ of the BHP Billiton Group (Exploration and evaluation expenditure) for a discussion of the accounting policy applied to the cost of exploratory wells. Suspended wells are also reviewed in this context.

The following tables provide the changes to capitalised exploratory well costs that were pending the determination of proved reserves for the three years ended 30 June 2014, 30 June 2013 and 30 June 2012.



2014

US$M

2013

uS$M

2012

uS$M

Movement in capitalised exploratory well costs




At the beginning of the year

603

703

550

Additions to capitalised exploratory well costs pending the determination of proved reserves

28

97

455

Capitalised exploratory well costs charged to expense

(194)

(99)

(144)

Capitalised exploratory well costs reclassified to wells, equipment, and facilities based




on the determination of proved reserves

(48)

(56)

(158)

Other

(1)

(42)

At the end of the year

388

603

703


The following table provides an ageing of capitalised exploratory well costs, based on the date the drilling was completed, and the number of projects for which exploratory well costs have been capitalised for a period greater than one year since the completion of drilling.



2014

US$M

2013

uS$M

2012

uS$M

Ageing of capitalised exploratory well costs

Exploratory well costs capitalised for a period of one year or less


31


96


340

Exploratory well costs capitalised for a period greater than one year

357

507

363

At the end of the year

388

603

703






2014

2013

2012

Number of projects that have been capitalised for a period greater than one year

17

15

10

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6

Legal proceedings

Drilling and other exploratory and development activities

The number of crude oil and natural gas wells drilled and completed for each of the last three years was as follows:


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Net Exploratory Wells Net Development Wells


Productive

Dry

Total


Productive

Dry

Total

Total

Year ended 30 June 2014









Australia

1

2

3


3

3

6

united States (a)

2

2


401

15

416

418

Other (b)


1

1

1

Total

1

4

5


405

15

420

425

Year ended 30 June 2013









Australia

1

1


1

united States (a)

1

1


352

16

368

369

Other (b)


2

2

2

Total

2

2


354

16

370

372

Year ended 30 June 2012









Australia


1

1

1

united States

4

3

7


190

1

191

198

Other (b)

1

1


2

1

3

4

Total

4

4

8


193

2

195

203

7

Financial Statements

  1. Dry net development wells include four net wells (2013: 13 net wells) that encountered problems during drilling and/or completion and were not pursued further.

  2. Other is primarily comprised of Algeria, Pakistan, Trinidad and Tobago and the united Kingdom.


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8

Glossary

The number of wells drilled refers to the number of wells completed at any time during the respective year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for production of oil or gas, or, in the case of a dry well, to reporting to the appropriate authority that the well has been abandoned.

An exploratory well is a well drilled to find oil or gas in a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. A development well is a well drilled within the limits of a known oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

A productive well is an exploratory, development or extension well that is not a dry well. A dry well (hole) is an exploratory, development, or extension well that proves to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.


Oil and gas properties, wells, operations and acreage

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9

Shareholder information

The following tables show the number of gross and net productive crude oil and natural gas wells and total gross and net developed and undeveloped oil and natural gas acreage as at 30 June 2014. A gross well or acre is one in which a working interest is owned, while a net well or acre exists when the sum of fractional working interests owned in gross wells or acres equals one. Productive wells are producing wells and wells mechanically capable of production. Developed acreage is comprised of leased acres that are within an area by or assignable to a productive well. undeveloped acreage is comprised of leased acres on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil and gas, regardless of whether such acres contain proved reserves.

The number of productive crude oil and natural gas wells in which we held an interest at 30 June 2014 was as follows:


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Crude Oil Wells Natural Gas Wells Total


Gross

Net


Gross

Net


Gross

Net

Australia

354

176


127

48


481

224

united States

391

214


7,362

2,431


7,753

2,645

Other (a)

60

24


46

10


106

34

Total

805

414


7,535

2,489


8,340

2,903

(a) Other is primarily comprised of Algeria, Pakistan, Trinidad and Tobago and the united Kingdom.


Of the productive crude oil and natural gas wells, 25 (net: 10) operated wells had multiple completions. Developed and undeveloped acreage (including both leases and concessions) held at 30 June 2014 was as follows:

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Developed Acreage Undeveloped Acreage

Thousands of acres

Gross

Net


Gross

Net

Australia

2,072

811


7,125

4,463

united States

1,157

674


2,220

1,510

Other (a)

307

115


13,825

9,955

Total (b)

3,536

1,600


23,170

15,928

  1. undeveloped acreage primarily consists of acreage in Brazil, Trinidad and Tobago, South Africa, Philippines and Malaysia.

  2. Approximately 1,470,807 gross acres (1,276,339 net acres), 1,937,729 gross acres (1,110,992 net acres) and 5,196,953 gross acres (4,914,905 net acres) of undeveloped acreage will expire in the years ending 30 June 2015, 2016 and 2017 respectively, if the Company does not establish production or take any other action to extend the terms of the licenses and concessions.

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  1. Glossary

image

    1. Mining, oil and gas-related terms

      2D

      Two dimensional.

      3D

      Three dimensional.

      Alumina

      Aluminium oxide (Al2O3). Alumina is produced from bauxite in the refining process. Alumina is then converted (reduced) in an electrolysis cell to produce aluminium metal.

      Ash

      Inorganic material remaining after combustion.

      AusIMM

      The Australasian Institute of Mining and Metallurgy.

      Bauxite

      The chief ore of aluminium.

      Beneficiation

      The process of physically separating ore from gangue prior to subsequent processing of the beneficiated ore.

      Brownfield

      An exploration or development project located within an existing mineral province, which can share infrastructure and management with an existing operation.

      Coal Reserves

      The same meaning as Ore Reserves, but specifically concerning coal.

      Coking coal

      Used in the manufacture of coke, which is used in the steelmaking process by virtue of its carbonisation properties. Coking coal may also be referred to as metallurgical coal.

      Competent Person

      A minerals industry professional who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy, or of the

      Australian Institute of Geoscientists, or of a ‘Recognised Professional Organisation’ (RPO), as included in a list available on the JORC

      and ASX websites. These organisations have enforceable disciplinary processes, including the powers to suspend or expel a member.

      A Competent Person must have a minimum of five years’ relevant experience in the style of mineralisation or type of deposit under consideration and in the activity that the person is undertaking (JORC Code, 2012).

      Condensate

      A mixture of hydrocarbons that exist in gaseous form in natural underground reservoirs, but which condense to form a liquid at atmospheric conditions.

      Copper cathode

      Electrolytically refined copper that has been deposited on

      the cathode of an electrolytic bath of acidified copper sulphate solution. The refined copper may also be produced through leaching and electrowinning.

      Crude oil

      A mixture of hydrocarbons that exist in liquid form in natural underground reservoirs, and remain liquid at atmospheric pressure after being produced at the well head and passing through surface separating facilities.

      Cut-off grade

      A nominated grade above which is defined an Ore Reserve or Mineral Resource. For example, the lowest grade of mineralised material that qualifies as economic for estimating an Ore Reserve.

      CQCA

      Central Queensland Coal Associates.

      Dated Brent

      A benchmark price assessment of the spot market value of physical cargoes of North Sea light sweet crude oil.

      Electrowinning/electrowon

      An electrochemical process in which metal is recovered by dissolving a metal within an electrolyte and plating it onto an electrode.

      Energy coal

      Used as a fuel source in electrical power generation, cement manufacture and various industrial applications. Energy coal may also be referred to as steaming or thermal coal.

      Ethane

      A component of natural gas. Where sold separately, is largely ethane gas that has been liquefied through pressurisation.

      One tonne of ethane is approximately equivalent to 26.8 thousand cubic feet of gas.

      FAusIMM

      Fellow of the Australasian Institute of Mining and Metallurgy.

      Field

      An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field that are separated vertically by intervening impervious strata, or laterally by local geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field.

      The geological terms structural feature and stratigraphic condition are intended to identify localised geological features as opposed to the broader terms of basins, trends, provinces, plays,

      areas-of-interest, etc. (per SEC Regulation S-X, Rule 4-10).

      Flotation

      A method of selectively recovering minerals from finely ground ore using a froth created in water by specific reagents. In the flotation process, certain mineral particles are induced to float by becoming attached to bubbles of froth and the unwanted mineral particles sink.

      FPSO (Floating, production, storage and off-take)

      A floating vessel used by the offshore oil and gas industry for the processing of hydrocarbons and for storage of oil. An FPSO

      vessel is designed to receive hydrocarbons produced from nearby platforms or subsea templates, process them and store oil until

      it can be offloaded onto a tanker.

      Grade

      Any physical or chemical measurement of the characteristics of the material of interest in samples or product.

      Greenfield

      The development or exploration located outside the area of influence of existing mine operations/infrastructure.

      GSSA

      Geological Society of South Africa.

      Heap leach(ing)

      A process used for the recovery of metals such as copper, nickel, uranium and gold from low-grade ores. The crushed material is laid on a slightly sloping, impermeable pad and leached by uniformly trickling (gravity fed) a chemical solution through the beds to ponds. The metals are recovered from the solution.

      ICSID (International Centre for Settlement of Investment Disputes)

      ICSID is an autonomous international institution that provides facilities and services to support conciliation and arbitration of international investment disputes between investors and States. ICSID was established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention), with over 140 member States.

      JORC Code

      A set of minimum standards, recommendations and guidelines for public reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The guidelines are defined by the Australasian Joint Ore Reserves Committee (JORC), which is sponsored by the Australian mining industry and

      its professional organisations.

      Kriging

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      6

      Legal proceedings

      A geostatistical method of estimating resources based on a mathematical function known as a semivariogram.

      Leaching

      The process by which a soluble metal can be economically recovered from minerals in ore by dissolution.

      LNG (Liquefied natural gas)

      Consists largely of methane that has been liquefied through chilling and pressurisation. One tonne of lNG is approximately equivalent to 45.9 thousand cubic feet of natural gas.

      LOI (Loss on ignition)

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      7

      Financial Statements

      A measure of the percentage of volatile matter (liquid or gas) contained within a mineral or rock. lOI is determined to calculate loss in mass during pyroprocessing.

      LPG (Liquefied petroleum gas)

      Consists of propane and butane and a small amount (less than two per cent) of ethane that has been liquefied through pressurisation. One tonne of lPG is approximately equivalent to 11.6 barrels of oil.

      MAIG

      Member of the Australian Institute of Geoscientists.

      Marketable Coal Reserves

      Represents beneficiated or otherwise enhanced coal product where modifications due to mining, dilution and processing have been considered, must be publicly reported in conjunction with, but not instead of, reports of Coal Reserves. The basis

      image

      8

      Glossary

      of the predicted yield to achieve Marketable Coal Reserves must be stated (JORC Code, 2012).

      MAusIMM

      Member of the Australasian Institute of Mining and Metallurgy.

      Measured Resource

      That part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation

      of the economic viability of the deposit.

      Metallurgical coal

      image

      9

      Shareholder information

      A broader term than coking coal, which includes all coals used in steelmaking, such as coal used for the pulverised coal injection process.

      Mineral Resource

      A concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (quality) and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality),

      continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling (JORC Code, 2012).

      Mineralisation

      Any single mineral or combination of minerals occurring in a mass, or deposit, of economic interest.

      Modifying Factors

      Considerations used to convert Mineral Resources to Ore Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

      NGL (Natural gas liquids)

      Consists of propane, butane and ethane – individually or as a mixture.

      OC/OP (Open-cut/open-pit)

      Surface working in which the working area is kept open to the sky.



      Ore Reserves

      The economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances

      for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level

      as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

      PEGNL

      Association of Professional Engineers and Geoscientists of Newfoundland and labrador.

      Probable Ore Reserves

      The economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is lower than that applying to a Proved Ore Reserve. Consideration of the confidence level of the Modifying Factors is important in conversion of Mineral Resources to Ore Reserves. A Probable Ore Reserve

      has a lower level of confidence than a Proved Ore Reserve but is of sufficient quality to serve as the basis for a decision on the development of the deposit (JORC Code, 2012).

      Proved oil and gas reserves

      Those quantities of oil, gas, and natural gas liquids, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing

      economic conditions, operating methods, and government regulations

      – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation (from SEC Modernization of Oil and Gas Reporting, 2009).

      Proved Ore Reserves

      A Proved Ore Reserve represents the highest confidence category of reserve estimate and implies a high degree of confidence in geological and grade continuity, and the consideration of the Modifying Factors. The style of mineralisation or other factors could mean that Proved Ore Reserves are not achievable in some deposits

      (JORC Code, 2012). Implies the highest degree of geological, technical and economic confidence in the estimate at the level of production increments used to support mine planning and production scheduling.

      Qualified petroleum reserves and resources evaluator

      A qualified petroleum reserves and resources evaluator, as defined in Chapter 19 of the ASX listing Rules.

      Reserve life

      Current stated Ore Reserves estimate divided by the current approved nominated production rate as at the end of the financial year.

      Run of mine product

      Product mined in the course of regular mining activities.

      SACNASP

      South African Council for Natural Scientific Professions.

      SAIMM

      The Southern African Institute of Mining and Metallurgy.

      SME reg’d member

      Registered member of the Society of Mining, Metallurgy and Exploration.

      Solvent extraction

      A method of separating one or more metals from a leach solution by treating with a solvent that will extract the required metal, leaving the others. The metal is recovered from the solvent

      by further treatment.

      Spud

      Commence drilling of an oil or gas well.


      SP (Stockpile)

      An accumulation of ore or mineral built up when demand slackens or when the treatment plant or beneficiation equipment is incomplete or temporarily unable to process the mine output; any heap of material formed to create a buffer for loading

      or other purposes or material dug and piled for future use.

      Tailings

      Those portions of washed or milled ore that are too poor to be treated further or remain after the required metals and minerals have been extracted.

      TLP (Tension leg platform)

      A vertically moored floating facility for production of oil and gas.

      Total Coal Reserves

      Run of mine reserves as outputs from the mining activities.

      Total Ore Reserves

      Proved Ore Reserves plus Probable Ore Reserves.

      Total Resource

      The sum of Inferred, Indicated and Measured Resources.


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    2. Non-mining, oil and gas terms

      A$

      Australian dollars being the currency of the Commonwealth of Australia.

      ADR (American Depositary Receipt)

      Instruments that trade on the NYSE.

      ADS (American Depositary Share)

      A share issued under a deposit agreement that has been created

      to permit US-resident investors to hold shares in non-US companies and trade them on the stock exchanges in the United States.

      One ADS is equal to two BHP Billiton limited shares. Similarly one ADS is equal to two BHP Billiton Plc ordinary shares. ADSs are evidenced by American Depositary Receipts, or ADRs, which are the instruments that trade on the NYSE.

      ASIC (Australian Securities and Investments Commission) The Australian Government agency that enforces laws relating to companies, securities, financial services and credit in order to protect consumers, investors and creditors.

      ASX (Australian Securities Exchange)

      ASX is a multi-asset class vertically integrated exchange group that functions as a market operator, clearing house and payments system facilitator. It oversees compliance with its operating rules, promotes standards of corporate governance among Australia’s listed companies and helps educate retail investors.

      Australian Tax Treaty

      A tax convention between Australia and the United States as to the avoidance of double taxation.

      BHP Billiton

      Being both companies in the Dual listed Company structure, BHP Billiton limited and BHP Billiton Plc.

      BHP Billiton Limited share

      A fully paid ordinary share in the capital of BHP Billiton limited.

      BHP Billiton Limited shareholders

      The holders of BHP Billiton limited shares.

      BHP Billiton Limited Special Voting Share

      A single voting share issued to facilitate joint voting by shareholders of BHP Billiton limited on Joint Electorate Actions.

      BHP Billiton Plc equalisation share

      A share that has been authorised to be issued to enable a distribution to be made by BHP Billiton Plc Group to the BHP Billiton limited Group should this be required under the terms of the DlC merger.

      BHP Billiton Plc 5.5 per cent preference share

      Shares that have the right to repayment of the amount paid up on the nominal value and any unpaid dividends in priority of any other class of shares in BHP Billiton Plc on a return

      of capital or winding up.

      BHP Billiton Plc share

      A fully paid ordinary share in the capital of BHP Billiton Plc.

      BHP Billiton Plc shareholders

      The holders of BHP Billiton Plc shares.

      BHP Billiton Plc Special Voting Share

      A single voting share issued to facilitate joint voting by shareholders of BHP Billiton Plc on Joint Electorate Actions.

      Board

      The Board of Directors of BHP Billiton.

      Business

      Refers to one of BHP Billiton’s Petroleum and Potash; Copper; Iron Ore; Coal; Aluminium, Manganese and Nickel Business Groups formed in May 2013. Collectively, they are referred

      to as the Businesses.

      CEO

      Chief Executive Officer.

      CFR (Cost and freight…named port of destination)

      The seller must pay the costs and freight necessary to bring the goods to the named port of destination, but the risk of loss of, or damage to the goods, as well as any additional costs due

      to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship’s rail in the port of shipment.

      The CFR term requires the seller to clear the goods for shipment.

      Community investment

      Contributions made to support communities in which we operate or have an interest. Our contributions to community programs comprise cash, in-kind support and administration costs. Our targeted level of contribution is one per cent of pre-tax profit calculated on the average of the previous three years’ pre-tax profit as reported.

      CSG (Customer Sector Group)

      Prior to 10 May 2013, referred to as a BHP Billiton product-based global business unit.

      CY20XX

      Refers to the calendar year ending 31December 20XX, where XX is the two-digit number of the year.

      Dividend Record Date

      The date, determined by a company’s board of directors, by when an investor must be recorded as an owner of shares in order to qualify for a forthcoming dividend.

      DLC

      Dual listed Company.

      DLC merger

      The Dual listed Company merger between BHP Billiton limited and BHP Billiton Plc on 29 June 2001.

      DLC structure

      The corporate structure resulting from the DlC merger.

      EBIT

      Earnings before net finance costs and taxation.

      EITI (Extractive Industries Transparency Initiative)

      An international initiative dedicated to the enhancement of transparency around the payments of taxes and royalties derived from resource development.

      FOB (Free on board…named port of shipment)

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      Legal proceedings

      The seller delivers when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of, or damage to the goods from that

      point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport.

      FPIC (Free prior informed consent)

      A principle requiring that individuals and communities should be informed – in appropriate, accessible language – about projects that might take place on their land. It also guarantees that they are given the opportunity to give or withhold their consent to a project before it commences.

      FY20XX

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      7

      Financial Statements

      Refers to the financial year ending 30 June 20XX, where XX is the two-digit number for the year.

      GAAP

      Generally accepted accounting principles.

      Gearing

      The ratio of net debt to net debt plus net assets.

      GHG (Greenhouse gas)

      For BHP Billiton reporting purposes, these are the aggregate anthropogenic carbon dioxide equivalent emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).

      Group

      BHP Billiton limited, BHP Billiton Plc and their subsidiaries.

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      8

      Glossary

      Group Function

      Group Functions act as agents of the Group Management Committee (GMC). They operate under a defined set of mandates that relate to:

      • the governance of BHP Billiton;

      • the CEO limits established by the BHP Billiton Board;

      • the activities necessary to improve the effectiveness of the Group.

        GLD (Group Level Document)

        The documents that give effect to the mandatory requirements arising from the BHP Billiton Operating Model as approved by the GMC. They describe the mandatory minimum performance requirements and accountabilities for definitive business

        obligations, processes, functions and activities across BHP Billiton.

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        9

        Shareholder information

        GMC (Group Management Committee)

        The executive management group within BHP Billiton as determined by the CEO. Its role is defined by the GMC Terms of Reference.

        IFRS (International Financial Reporting Standards) Accounting standards as issued by the International Accounting Standards Board.

        JSE

        Johannesburg Stock Exchange.

        JV

        Joint venture.

        KMP (Key Management Personnel)

        Persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly (including Executive Directors), and Non-executive Directors.

        For BHP Billiton it includes the GMC.

        KPI (Key Performance Indicator)

        Used to measure the performance of the Group, individual businesses and executives in any one year.



        LME

        london Metal Exchange.

        LSE

        london Stock Exchange.

        Major capital projects

        Projects where the investment commitment exceeds the Group approval threshold, or complexity or associated reputational risk or exposure necessitates review at a Group level (and within the Group investment process).

        Marketing

        Refers to the BHP Billiton staff, processes and activities that provide marketing services to the whole organisation.

        NYMEX (New York Mercantile Exchange)

        A New York physical futures exchange that trades energy commodities (i.e. crude oil and natural gas) and precious metals in futures and options markets.

        NYSE

        New York Stock Exchange.

        OEL (Occupational exposure limit)

        The concentration of a substance or agent, exposure to which, according to current knowledge, should not cause adverse health effects nor cause undue discomfort to nearly all workers.

        Occupational illness

        An illness that occurs as a consequence of work-related activities or exposure. It includes acute or chronic illnesses or diseases, which

        may be caused by inhalation, absorption, ingestion or direct contact.

        OSHA

        United States Government Occupational Safety and Health Administration.

        Platts

        Platts is a global provider of energy, petrochemicals, metals and agriculture information, and a premier source of benchmark price assessments for those commodity markets.

        Project investment

        Total budgeted capital expenditure on growth projects under development at year-end. Refer to section 2.4 Major projects, for a full listing of these growth projects.

        Quality-of-life indicators

        Measures of people’s overall wellbeing, including material wellbeing (standard of living) and non-material components such as the quality of the environment, national security, personal safety, and political and economic freedoms.

        Quoted

        In the context of American Depositary Shares (ADS) and listed investments, the term ‘quoted’ means ‘traded’ on the relevant exchange.

        REi (Resource Endowment initiative)

        An initiative of the International Council on Mining and Metals

        to enhance industry’s socio-economic contribution to the countries and communities where organisations such as BHP Billiton operate, by better understanding the factors that either inhibit or promote social and economic development linked to large-scale mining projects.

        ROCE (Return on capital employed)

        Calculated as earnings from operations, excluding exceptional items and net finance costs (after tax), divided by average capital employed. Average capital employed is calculated as net assets less net debt.


        SEC (United States Securities and Exchange Commission) United States regulatory commission that aims to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation.

        Senior manager

        An employee who has responsibility for planning, directing or controlling the activities of the entity or a strategically significant part of it. In the Strategic Report, senior manager includes senior leaders and any persons who are directors of any subsidiary company even if they are not senior leaders.

        Shareplus

        All-employee share purchase plan.

        Strate

        South Africa’s Central Securities Depositary for the electronic settlement of financial instruments.

        TRIF (Total recordable injury frequency)

        The sum of (fatalities + lost-time cases + restricted work cases

        + medical treatment cases) x 1,000,000 ÷ actual hours worked.

        Stated in units of per million hours worked. BHP Billiton adopts

        the US Government Occupational Safety and Health Administration guidelines for the recording and reporting of occupational injury and illnesses. Excludes non-operated assets.

        TSR (Total shareholder return)

        TSR measures the return delivered to shareholders over a certain period through the change in share price and any dividends paid.

        It is the measure used to compare BHP Billiton’s performance to that of other relevant companies under the lTIP.

        UKLA (United Kingdom Listing Authority)

        Term used when the UK Financial Conduct Authority (FCA) acts as the competent authority under Part VI of the UK Financial Services and Markets Act (FSMA).

        Underlying EBIT

        Calculated as earnings before net finance costs, taxation and any exceptional items.

        Underlying EBIT margin

        Calculated as Underlying EBIT excluding third party EBIT, divided by revenue net of third party product revenue.

        US$

        The Group’s reporting currency and the functional currency of the majority of its operations is the US dollar, as this is assessed to be the principal currency of the economic environments in which they operate.

        WTI (West Texas Intermediate)

        A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Crude oil is refined to produce a wide array of petroleum products, including heating oils; gasoline, diesel and jet fuels; lubricants; asphalt; ethane, propane, and butane; and many other products used

        for their energy or chemical content.

        West Texas Intermediate refers to a crude stream produced in

        Texas and southern Oklahoma that serves as a reference or ‘marker’ for pricing a number of other crude streams and which is traded in the domestic spot market at Cushing, Oklahoma.

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    3. Terms used in reserves and resources

    4. Units of measure


      image

      A.AI2O3

      available alumina

      Ag

      silver

      AI2O3

      alumina

      Anth

      anthracite

      Au

      gold

      Cu

      copper

      CV

      calorific value

      Fe

      iron

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      6

      Legal proceedings

      Fe O

      Mn

      manganese

      Mo

      molybdenum

      Ni

      nickel

      P

      phosphorous

      Pb

      lead

      Pc

      phosphorous in concentrate

      R.SiO2

      reactive silica

      S

      sulphur

      SCu

      %

      percentage or per cent

      bbl/d

      barrels per day

      boe

      barrels of oil equivalent – 6,000 scf of natural gas equals 1boe

      dmt

      dry metric tonne

      dmtu

      dry metric tonne unit

      g/t

      grams per tonne

      ha

      hectare

      kcal/kg

      kilocalories per kilogram

      MMboe

      million barrels of oil equivalent

      MMBtu

      million British thermal units – 1scf of natural gas equals 1,010 Btu

      MMcf/d

      million cubic feet per day

      image

      Mbbl/d

      7

      Financial Statements

      thousand barrels per day

      MMbbl/d

      million barrels per day

      MMcm/d

      million cubic metres per day

      Mscf

      thousand standard cubic feet

      Mt

      2 3

      kg/tonne or kg/t

      million tonnes

      iron oxide

      insol

      insolubles

      K2O

      potassium oxide

      KCl

      potassium chloride

      Met

      soluble copper

      SiO2

      silica

      TCu

      total copper

      Th

      thermal coal

      U O


      kilograms per tonne

      km

      kilometre

      koz

      kilo-ounce

      kV

      kilovolt

      Mtpa

      million tonnes per annum

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      8

      Glossary

      MW

      megawatt

      psi

      pounds per square inch

      ppm

      3 8 kt parts per million

      metallurgical coal

      MgO

      magnesium oxide

      uranium oxide

      VM

      volatile matter

      Zn

      zinc


      kilotonnes

      ktpa

      kilotonnes per annum

      ktpd

      kilotonnes per day

      kdwt

      thousand deadweight tonnes

      m

      metre

      ML

      megalitre

      mm

      millimetre

      scf

      standard cubic feet

      t

      tonne

      TJ

      image

      terajoule

      9

      Shareholder information

      TJ/d

      terajoules per day

      tpa

      tonnes per annum

      tpd

      tonnes per day

      tph

      tonnes per hour

      wmt

      wet metric tonnes

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  1. Shareholder Information

    image

    1. History and development

      BHP Billiton Limited (formerly BHP Limited and before that The Broken Hill Proprietary Company Limited) was incorporated in 1885 and

      is registered in Australia with ABN 49 004 028 077. BHP Billiton Plc (formerly Billiton Plc) was incorporated in 1996 and is registered

      in England and Wales with registration number 3196209. Successive predecessor entities to BHP Billiton Plc have operated since 1860.

      Since 29 June 2001, we have operated under a Dual Listed Company (DLC) structure. Under the DLC structure, the two parent companies, BHP Billiton Limited and BHP Billiton Plc operate as a single economic entity, run by a unified Board and management team. More details of the DLC structure can be found in section 9.3.2 of this Annual Report.

      BHP Billiton Limited has a primary listing on the Australian Securities Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the UK Listing Authority’s Official List and its ordinary shares

      are admitted to trading on the London Stock Exchange (LSE) in the United Kingdom and a secondary listing on the Johannesburg Stock Exchange (JSE) in South Africa. In addition, BHP Billiton Limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States.


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    2. Markets

      As at the date of this Annual Report, BHP Billiton Limited has

      a primary listing on the Australian Securities Exchange (ASX) in Australia and BHP Billiton Plc has a premium listing on the UK Listing Authority’s Official List and its ordinary shares are admitted to trading on the London Stock Exchange (LSE). BHP Billiton Plc also has a secondary listing on the Johannesburg Stock Exchange (JSE) in South Africa.

      In addition, BHP Billiton Limited and BHP Billiton Plc are listed on the New York Stock Exchange (NYSE) in the United States. Trading on the NYSE is via American Depositary Shares (ADSs), each representing two ordinary shares evidenced by American Depositary Receipts (ADRs). Citibank N.A. (Citibank) is the Depositary for both ADR programs. BHP Billiton Limited’s ADSs have been listed for trading on the NYSE (ticker BHP) since 28 May 1987 and BHP Billiton Plc’s since 25 June 2003 (ticker BBL).


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    3. Organisational structure


      1. General

        The BHP Billiton Group consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group as a combined enterprise, following the completion of the Dual Listed Company (DLC) merger in June 2001. Refer to note 26 ‘Subsidiaries’ to the Financial Statements for a list of BHP Billiton Limited and BHP Billiton Plc significant subsidiaries.

        The BHP Billiton DLC merger was designed to place shareholders of both companies in a position where they effectively have an interest in a single group that combines the assets, and is subject to the liabilities, of both companies. BHP Billiton Limited and

        BHP Billiton Plc have each retained their separate corporate identities and maintain separate stock exchange listings, but they are operated and managed as if they are a single unified economic entity, with their Boards and senior executive management comprising the

        same people.

      2. DLC structure

        The principles of the BHP Billiton DLC are reflected in the BHP Billiton Sharing Agreement and include the following:

          • the two companies are to operate as if they are a single unified economic entity, through Boards of Directors that comprise the same individuals and a unified senior executive management;

          • the Directors of both companies will, in addition to their duties to the company concerned, have regard to the interests of

            BHP Billiton Limited shareholders and BHP Billiton Plc shareholders as if the two companies were a single unified economic entity and, for that purpose, the Directors of each company take into account in the exercise of their powers the interests of the shareholders

            of the other;

          • certain DLC equalisation principles must be observed. These are designed to ensure that for so long as the Equalisation Ratio between a BHP Billiton Limited share and a BHP Billiton Plc share is 1:1, the economic and voting interests in the combined BHP Billiton Group resulting from the holding of one BHP Billiton Limited share are equivalent to that resulting from one

            BHP Billiton Plc share. Further details are set out in the

            sub-section ‘Equalisation of economic and voting rights’ below.

            Additional documents that affect the DLC include:

          • BHP Billiton Limited Constitution

          • BHP Billiton Plc Articles of Association

          • BHP Billiton Special Voting Shares Deed

          • BHP Billiton Limited Deed Poll Guarantee

          • BHP Billiton Plc Deed Poll Guarantee.

            Australian Foreign Investment Review Board (FIRB) conditions

            The Treasurer of Australia approved the DLC merger subject to certain conditions, the effect of which was to require that, among other things, BHP Billiton Limited continues to:

          • be an Australian company, which is managed from Australia;

          • ultimately manage and control the companies conducting the business that was conducted by it at the time of the merger for as long as those businesses form part of the BHP Billiton Group.

            The conditions have effect indefinitely, subject to amendment of the Australian Foreign Acquisitions and Takeovers Act 1975 or any revocation or amendment by the Treasurer of Australia. If BHP Billiton Limited no longer wishes to comply with these conditions, it must obtain the prior approval of the Treasurer.

            Failure to comply with the conditions attracts substantial penalties under the Foreign Acquisitions and Takeovers Act 1975.

            Equalisation of economic and voting rights

            BHP Billiton Limited shareholders and BHP Billiton Plc shareholders have economic and voting interests in the combined BHP Billiton Group. The economic and voting interests represented by a share in one company relative to the economic and voting interests

            of a share in the other company are determined by reference

            to a ratio known as the Equalisation Ratio. Presently, the economic and voting interests attached to each BHP Billiton Limited share and each BHP Billiton Plc share are the same, since the Equalisation Ratio is 1:1. The Equalisation Ratio would change if either

            BHP Billiton Limited or BHP Billiton Plc returned value to only its shareholders and no matching action was taken.

            This means that the amount of any cash dividend paid by

            BHP Billiton Limited in respect of each BHP Billiton Limited share is normally matched by an equivalent cash dividend by BHP Billiton Plc in respect of each BHP Billiton Plc share, and vice versa. If one company has insufficient profits or is otherwise unable to pay the agreed dividend, BHP Billiton Limited and BHP Billiton Plc will,

            as far as practicable, enter into such transactions as are necessary to enable both companies to pay the agreed amount of pre-tax dividends per share.

            Joint Electorate Actions

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            6

            Legal proceedings

            Under the terms of the DLC agreements, the BHP Billiton Limited Constitution and the BHP Billiton Plc Articles of Association have implemented special voting arrangements so that the shareholders of both companies vote together as a single decision-making body on matters affecting the shareholders of each company in similar ways (such matters are referred to as Joint Electorate Actions).

            For so long as the Equalisation Ratio remains 1:1, each BHP Billiton Limited share will effectively have the same voting rights as each BHP Billiton Plc share on Joint Electorate Actions.

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            7

            Financial Statements

            A Joint Electorate Action requires approval by ordinary resolution (or special resolution if required by statute, regulation, applicable listing rules or other applicable requirements) of BHP Billiton Limited and also of BHP Billiton Plc. Both the BHP Billiton Limited ordinary shareholders and the holder of the BHP Billiton Limited Special Voting Share vote as a single class and, in the case of BHP Billiton Plc, the BHP Billiton Plc ordinary shareholders and the holder

            of the BHP Billiton Plc Special Voting Share vote as a single class.

            Class Rights Actions

            In the case of certain actions in relation to which the two bodies of shareholders may have divergent interests (referred to as Class Rights Actions), the company wishing to carry out the Class Rights Action requires the prior approval of the shareholders in the other company voting separately and, where appropriate, the approval of its own shareholders voting separately. Depending on the

            type of Class Rights Action undertaken, the approval required

            is either an ordinary or special resolution of the relevant company.

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            8

            Glossary

            These voting arrangements are secured through the constitutional documents of the two companies, the BHP Billiton Sharing Agreement, the BHP Billiton Special Voting Shares Deed and rights attaching to a specially created Special Voting Share issued by each company and held in each case by a Special Voting Company. The shares in the Special Voting Companies are held legally and beneficially by Law Debenture Trust Corporation Plc.

            Cross guarantees

            BHP Billiton Limited and BHP Billiton Plc have each executed a Deed Poll Guarantee, pursuant to which creditors entitled to the benefit of the BHP Billiton Limited Deed Poll Guarantee and the BHP Billiton Plc Deed Poll Guarantee will, to the extent possible, be placed in the same position as if the relevant debts were owed

            by both BHP Billiton Limited and BHP Billiton Plc on a combined basis.

            Restrictions on takeovers of one company only

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            9

            Shareholder information

            The BHP Billiton Limited Constitution and the BHP Billiton Plc Articles of Association have been drafted to ensure that, except with the consent of the Board, a person cannot gain control of one company without having made an equivalent offer to the shareholders of

            both companies on equivalent terms. Sanctions for breach of these provisions would include withholding of dividends, voting restrictions and the compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.


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    1. Material contracts

      DLC agreements

      On 29 June 2001, BHP Billiton Limited (then known as BHP Limited) and BHP Billiton Plc (then known as Billiton Plc) merged by way

      of a DLC structure. To effect the DLC, BHP Limited and Billiton Plc (as they were then known) entered into the following agreements designed to place the shareholders of both companies in a position where they effectively have an interest in a single group that combines the assets, and is subject to all the liabilities, of both companies:

      • BHP Billiton Sharing Agreement

      • BHP Billiton Special Voting Shares Deed

      • BHP Billiton Limited Deed Poll Guarantee

      • BHP Billiton Plc Deed Poll Guarantee.

        The effect of each of these agreements and the manner in which they operate are described in section 9.3 of this Annual Report.


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    2. Constitution


The following text summarises the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc. The effect of the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc is, so far as possible, identical. Where the term ‘BHP Billiton’ is used in this description of the Constitution and Articles of Association, it can be read to mean either BHP Billiton Limited or BHP Billiton Plc.

Certain provisions of the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc can only be amended where such amendment is approved by special resolution either:

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Corporate Directory



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BHP Billiton Group Registered Offices BHP Billiton Limited

Australia

171 Collins Street

Melbourne VIC 3000

Telephone 1300 554 757 (within Australia)

+61 3 9609 3333 (outside Australia)

Facsimile +61 3 9609 3015

BHP Billiton Plc United Kingdom Neathouse Place London SW1V 1LH

Telephone +44 20 7802 4000

Facsimile +44 20 7802 4111

Group Company Secretary

Jane McAloon

BHP Billiton Corporate Centres South Africa

6 Hollard Street Marshalltown Johannesburg 2107

Telephone +27 11 376 9111

Facsimile +27 11 838 4716

Chile

Cerro El Plomo 6000 Piso 18

Las Condes 7560623 Santiago

Telephone +56 2 2579 5000

Facsimile +56 2 2207 6517


United States

Our agent for service in the United States is Maria Isabel Reuter at:

1360 Post Oak Boulevard, Suite 150

Houston, TX 77056-3020

Telephone +1 713 961 8500

Facsimile +1 713 961 8400

Marketing Offices Singapore

10 Marina Boulevard, #50-01

Marina Bay Financial Centre, Tower 2 Singapore 018983

Telephone +65 6421 6000

Facsimile +65 6421 7000


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Share Registrars and Transfer Offices Australia

BHP Billiton Limited Registrar Computershare Investor Services Pty Limited

Yarra Falls, 452 Johnston Street Abbotsford VIC 3067

Postal Address – GPO Box 2975 Melbourne VIC 3001

Telephone 1300 656 780 (within Australia)

+61 3 9415 4020 (outside Australia)

Facsimile +61 3 9473 2460 Email enquiries:

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United Kingdom

BHP Billiton Plc Registrar Computershare Investor Services PLC The Pavilions, Bridgwater Road Bristol BS99 6ZZ

Telephone +44 844 472 7001

Facsimile +44 870 703 6101 Email enquiries:

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South Africa

BHP Billiton Plc Branch Register and Transfer Secretary Computershare Investor Services (Pty) Limited

70 Marshall Street

Johannesburg 2001

Postal Address – PO Box 61051 Marshalltown 2107

Telephone +27 11 373 0033

Facsimile +27 11 688 5217 Email enquiries:

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Holders of shares dematerialised into Strate should contact their CSDP or stockbroker.

New Zealand

Computershare Investor Services Limited Level 2/159 Hurstmere Road

Takapuna Auckland 0622

Postal Address – Private Bag 92119 Auckland 1142

Telephone +64 9 488 8777

Facsimile +64 9 488 8787


United States

Computershare Trust Company, N.A. 250 Royall Street

Canton, MA 02021

Postal Address – PO Box 43078 Providence, RI 02940-3078

Telephone +1 888 404 6340 (toll-free within US) Facsimile +1 312 601 4331

ADR Depositary, Transfer Agent and Registrar Citibank Shareholder Services PO Box 43077

Providence, RI 02940-3077

Telephone +1 781 575 4555 (outside of US)

+1 877 248 4237 (+1-877-CITIADR)

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(toll-free within US) Facsimile +1 201 324 3284 Email enquiries:


Website:


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BHP Billiton produces a range of publications, which are available online at w image. If you are a shareholder, you can also elect to receive a paper copy of the Annual Report and Summary Review through the Share Registrar (above).



Value through performance

Summary Review 2014


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Summary Review



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Value through performance

Sustainability Report 2014

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Sustainability Report


BHP Billiton also produces a Community Review, which is available online at

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Our Contribution

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BHP Billiton in the community


Community Review


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resourcing the future